Key Points

On Wednesday (local time), the Fed lowered its benchmark interest rate by 25 basis points, marking the first rate cut since December and also the first under President Donald Trump's administration, reports Yonhap news agency.

It also signalled the possibility of two additional rate cuts within the year amid growing political and economic pressures to stimulate growth.

"This is expected to strengthen liquidity momentum and hopes for an economic recovery," said analyst Lee Kyoung-min from Daishin Securities.

Analyst Na Jeong-hwan from NH Investment & Securities offered a similar view, predicting that the latest rate cut could increase capital inflow from foreign investors.

"Foreign ownership across the KOSPI has rebounded to 33 percent but is still lower than their ownership before the COVID-19 pandemic, which was around 35 to 39 percent," Na said.

Han Ji-young from Kiwoon Securities reiterated expectations the KOSPI will continue a bullish run until the end of the year but warned of short-term volatilities as investors digest the details from the Federal Open Market Committee meeting.

Trade talks with Washington are another factor that could shape the future direction of the local stock market, according to analyst Hwang Jun-ho from SangSangIn Investment & Securities.

He argued that a longer-than-expected deadlock with the U.S. in tariff negotiations compared with other economies, such as Japan and the European Union, could reduce the price competitiveness of South Korea's major export items and add downward pressure to the KOSPI.

"If tariff negotiations are not concluded properly, it could offset the government's efforts to boost the stock market, leading to declines in sectors, such as semiconductors and bio, which are supposed to lead the KOSPI's rise."

- IANS