As of 10:30 a.m., the KOSPI stood at 8,920.98, up 0.64 percent, after climbing as high as 8,975.52 earlier in the session, a fresh intraday record and within striking distance of the 9,000 mark. The junior KOSDAQ, meanwhile, fell 2.12 percent to 1,010.05.
If achieved, 9,000 would become yet another four-digit milestone reached in less than a month. The KOSPI stood at 7,384.56 on May 6 before closing above the 8,000-point mark for the first time on May 26.
Should the index break above 9,000 on Thursday, it would have gained more than 1,600 points in just six weeks, marking one of the fastest advances in the market's history.
The rally came despite a more hawkish-than-expected Federal Reserve meeting overnight. The Fed kept interest rates unchanged at 3.50 percent to 3.75 percent, but signaled borrowing costs could rise again later this year after policymakers raised their outlook for future rates.
Asian investors appeared more focused on the U.S.-Iran deal. The United States and Iran signed a memorandum of understanding aimed at ending months of hostilities, sending crude prices sharply lower.
Brent crude briefly fell below $80 a barrel for the first time in three months, while U.S. West Texas Intermediate crude traded in the mid-$70 range, easing concerns over inflation and energy costs.
The Korean won weakened against the dollar following the FOMC decision, with the greenback trading at 1,524.20 won, compared with the previous session's close of 1,513.40 won.
Retail investors emerged as the dominant buyers, purchasing more than 1 trillion won worth of shares during early trading and offsetting selling by foreign and institutional investors.
Market participants said investors remained focused on Korea's improving earnings outlook, particularly in semiconductors and AI-related sectors, rather than short-term monetary tightening risks.
Semiconductor shares once again led the market higher.
SK hynix rose 3.13 percent to 2.60 million won after announcing it had begun supplying samples of its next-generation 12-layer HBM4E, a high-bandwidth memory chip designed for artificial intelligence applications.
The move came just weeks after Samsung Electronics unveiled its own HBM4E samples, adding momentum to the AI memory race between the country's two major chipmakers.
Samsung Electronics also gained 1.01 percent to 350,000 won.
Gains spread to several Samsung affiliates and financial shares. Samsung Electro-Mechanics jumped 7.38 percent to 2.18 million won, Samsung Biologics climbed 5.04 percent to 1.44 million won, SK Square rose 3.38 percent to 1.65 million won and Samsung Life Insurance advanced 2.91 percent to 460,000 won.
Not all blue chips joined the rally.
LG Energy Solution fell 3.31 percent to 402,250 won, Kia declined 3.07 percent to 161,200 won, Samsung C&T slipped 2.55 percent to 477,500 won and Hyundai Motor dropped 1.94 percent to 606,000 won.
HD Hyundai Heavy Industries lost 1.56 percent to 696,000 won, while Hanwha Aerospace edged down 1.14 percent to 1.21 million won and Doosan Enerbility eased 1.07 percent to 102,100 won.
While large-cap semiconductor and AI stocks advanced, the KOSDAQ retreated as investors took profits in biotech and secondary battery names after recent gains.
Among biotech shares, HLB rose 2.76 percent to 52,200 won and Alteogen gained 0.67 percent to 375,500 won.
Battery makers remained under pressure, with EcoPro BM falling 4.67 percent to 171,600 won and EcoPro sliding 4.23 percent to 117,600 won.
Technology shares also traded lower, with Jusung Engineering losing 3.41 percent to 212,500 won, Samchundang Pharm declining 3.07 percent to 268,000 won, Reno Industrial falling 3.06 percent to 91,800 won and Rainbow Robotics slipping 1.92 percent to 613,000 won.
Wonik IPS bucked the trend, rising 1.61 percent to 164,300 won.
Foreign and institutional investors remained net sellers on the junior exchange, adding pressure to growth-oriented shares.
Foreign investors are also increasing their exposure to Korea.
CSOP, a Hong Kong-based asset manager, launched the region's first ETF tracking the KOSPI 200 outside South Korea on Thursday. The ETF is heavily concentrated in Korea's AI winners, with Samsung Electronics accounting for 35.3 percent of assets and SK hynix 26.4 percent.
According to CSOP, global exchange-traded products with exposure to Korean equities attracted $31.9 billion in inflows last year. This year alone, they have already drawn $30.5 billion, nearly matching last year's total.
With the KOSPI already trading at record highs and only a few dozen points shy of the 9,000 milestone, investors are increasingly betting that Korea's AI-led earnings cycle can continue to overpower external headwinds.
Japan continued to outperform, with the benchmark Nikkei 225 climbing 1.79 percent to a fresh high of 71,154.22.
Chinese and Hong Kong equities moved in the opposite direction. The Shanghai Composite slipped 0.32 percent to 4,094.90, while Hong Kong's Hang Seng Index fell 0.99 percent to 24,071.26 as investors took profits after recent gains.
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