The KOSPI closed 3.76 percent higher at 6,598.26 after rising as much as 6,674.66 intraday. The surge triggered a buy-side sidecar early in the session, while the junior KOSDAQ gained 2.42 percent to 799.59 after briefly climbing above the 800-point level for the first time in 13 trading days.
Foreign investors drove the advance, purchasing a net 1.45 trillion won (US$1.04 billion) worth of KOSPI shares, while individuals and institutions sold a combined 1.47 trillion won to lock in profits following recent gains. Despite the strong buying in the cash market, foreigners remained modest net sellers of KOSPI200 futures, unloading a net 135.7 billion won.
Semiconductor heavyweights once again led gains after a strong overnight rally in U.S. technology stocks. SK hynix jumped 5.77 percent to close at 1,668,000 won, while Samsung Electronics gained 2.50 percent to 246,000 won. Samsung Electro-Mechanics soared 14.43 percent to 1,356,000 won, and SK Square added 5.57 percent to 1,119,000 won as buying spread across the Artificial Intelligence (AI)-related semiconductor supply chain.
Automakers also traded higher, with Hyundai Motor rising 3.06 percent to 404,500 won and Kia gaining 2.62 percent to 133,000 won.
Among industrial and defense names, Samsung C&T climbed 7.75 percent to 347,500 won, HD Hyundai Heavy Industries advanced 5.38 percent to 509,000 won, Doosan Enerbility gained 5.48 percent to 77,000 won, and Hanwha Aerospace edged up 0.30 percent to 1,007,000 won.
Financials and other large-cap stocks also finished higher, with Samsung Life Insurance rising 5.76 percent to 294,000 won, KB Financial adding 1.13 percent to 170,700 won, LG Energy Solution gaining 2.13 percent to 335,500 won, and Samsung Biologics inching up 1.02 percent to 1,491,000 won.
Sentiment was boosted after Wall Street rallied overnight. The S&P 500 and Dow Jones Industrial Average both closed at record highs, while the Nasdaq gained 2.59 percent. The advance was fueled by optimism that the United States and Iran were nearing an agreement to reopen the Strait of Hormuz, easing concerns over global energy supplies and pushing U.S. crude oil futures down 5.7 percent.
Technology shares also advanced after Advanced Micro Devices (AMD) reported better-than-expected second-quarter revenue and earnings and issued third-quarter sales guidance above market forecasts, reinforcing confidence that AI spending remains resilient.
AI software company Palantir Technologies also surged 29.45 percent after reporting strong quarterly results, while Nvidia gained 2.56 percent, Micron Technology rose 7.62 percent and Intel climbed 10.84 percent. The gains pushed the Philadelphia Semiconductor Index higher and lifted semiconductor shares globally. SK hynix's U.S.-listed ADRs also advanced 8.17 percent overnight, reinforcing bullish sentiment toward South Korean chipmakers.
The KOSDAQ rose for a fourth straight session, bringing its four-day gain to about 24 percent. Among major stocks, Alteogen rose 3.75 percent after announcing a 500 billion won licensing agreement with a global pharmaceutical company. Rainbow Robotics gained 3.64 percent, while Jusung Engineering and Wonik IPS climbed 5.07 percent and 1.24 percent, respectively.
Optical communication stocks outperformed after reports that the United States is preparing restrictions on imports of certain Chinese-made components used in data centers. Lightron closed at the daily 30 percent limit, while Taihan Fiberoptics jumped 18.57 percent.
Trading activity remained elevated, with turnover totalling 25.5 trillion won on the main board and 6.3 trillion won on the junior market.
The currency market also reflected the improved sentiment. The Korean won strengthened to 1,426.50 per dollar from 1,432.50 won in the previous close.
Regional markets also advanced. Japan's Nikkei 225 climbed 3.66 percent to 66,300.44, while China's Shanghai Composite gained 1.47 percent to 3,878.43 and Hong Kong's Hang Seng Index edged up 0.21 percent to 25,907.17.
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