South Korea’s benchmark Kospi index has rebounded to levels approaching those seen before the outbreak of the Middle East conflict, reflecting growing investor confidence despite ongoing geopolitical tensions. On Wednesday, the Kospi surged 123.64 points, or 2.07 percent, to close at 6,091.39, nearing the prewar threshold near 6,200. This marks an approximate 21 percent gain since March 31, when the United States and Iran first indicated a willingness to pursue de-escalation.

The recovery follows several weeks of market volatility influenced by heightened geopolitical risks and sharp rhetoric from U.S. President Donald Trump, which initially unsettled investors. However, market participants appear increasingly desensitized to such disruptions, treating the current geopolitical climate as a persistent factor rather than an immediate shock. This shift in investor sentiment aligns with movements in U.S. markets, where the S&P 500 recently surpassed late-February levels and edged closer to an all-time high, while the Nasdaq extended a 10-session winning streak—the longest since November 2021—led largely by gains in semiconductor stocks.

In Seoul, technology shares, particularly chipmakers, have been instrumental in supporting the Kospi’s recent rally. SK hynix shares reached an intraday record high on Wednesday, while Samsung Electronics approached its previous peak. Analysts have referred to this phenomenon as the “TACO trade” — an acronym for “Trump Always Chickens Out” — suggesting that investors have increasingly discounted President Trump’s inflammatory statements, dampening their impact on market stability. Nonetheless, some experts note that the potency of this dynamic has waned over time as it has become a familiar pattern.

This was reflected over the past weekend when news of stalled ceasefire negotiations briefly triggered market declines, only for the S&P 500 to finish the session up about 1 percent and the Kospi to recover most losses by close. The broader market trend indicates growing investor focus on company fundamentals and earnings prospects, rather than geopolitical risks alone.

Despite recent gains, some strategists caution that further significant advances may be constrained until there is clear progress toward an official ceasefire. Mark Hackett, chief market strategist at Nationwide, emphasized that equity markets might struggle to reach new record highs without tangible developments in peace talks. He noted that while underlying fundamentals remain solid and market expectations have adjusted, meaningful upside will likely depend on the resolution of current hostilities.