Seoul shares end higher as AI chip rally outweighs Middle East tensions

The index opened 0.26 percent higher and extended gains in afternoon trading, led by chip giants Samsung Electronics and SK hynix. The Korean won strengthened against the U.S. dollar, quoted at 1,336.1 won per dollar as of 3:30 p.m., up 6.7 won from the previous session's close.

Trade volume was moderate at 318 million shares worth 22.3 trillion won (US$16.7 billion), with advancers outnumbering decliners 463 to 398. Institutions bought a net 941.9 billion won, while foreigners and individuals sold a net 435 billion won and 2.23 trillion won, respectively.

Overnight, the Philadelphia Semiconductor Index increased 1.3 percent despite declines on Wall Street's three main indexes amid heightened Middle East tensions. Global oil prices extended gains on concerns over potential supply disruptions following another round of strikes on energy infrastructure in the region.

"Despite an uncertain external environment, OpenAI's launch of its latest model, GPT-6 Astra, renewed optimism about AI growth prospects, supporting AI-related stocks," said Lee Kyoung-min, an analyst at Daishin Securities.

Market bellwether Samsung Electronics was flat at 269,500 won, while chip rival SK hynix jumped 3.51 percent to 1.86 million won. Samsung Electro-Mechanics, an electronics component affiliate, gained 2.48 percent to 1.4 million won.

Battery makers also advanced after U.S. Transportation Secretary Sean Duffy criticized Ford Motor's ties with major Chinese auto firms, raising hopes that Korean electric vehicle battery makers could benefit. Leading battery maker LG Energy Solution jumped 6.46 percent to 371,000 won, while smaller rival Samsung SDI surged 8.3 percent to 574,000 won.

Hanwha Ocean went up 2.32 percent to 88,100 won after the shipbuilder said it had been selected as the preferred bidder for a Royal Thai Navy frigate project worth about US$500 million. Bond prices closed lower, with the yield on three-year Treasurys up 0.9 basis point to 3.910 percent and the benchmark five-year government bond yield adding 0.9 basis point to 4.136 percent.