Seoul's main stock index snapped a turbulent stretch with its strongest session in weeks, closing at a one-week high as heavyweight chipmakers surged on robust U.S. earnings and fresh evidence of massive AI capital spending, while cheaper oil soothed inflation nerves. Main Developments The benchmark KOSPI finished 3.8% higher at 6,598.26, its best close since July 27, while the junior Kosdaq index rose 2.4% to a three-week closing high. The rally tracked an overnight record close on Wall Street, where the Philadelphia Semiconductor index jumped 6.6% after AI-linked companies flagged heavy spending. Samsung Electronics and SK Hynix, which together account for more than half of the KOSPI's weight, climbed 2.9% and 6.7%, respectively. Automakers Hyundai Motor and Kia Corp added 3.1% and 2.6%, while POSCO Holdings rose 1.3% and Samsung BioLogics gained 1%. Read also: Why Japan's rubber futures are stuck near a turning point Subdued trading in leveraged single-stock ETFs tied to chipmakers has tempered the sharp volatility that hammered the market in recent weeks. The KOSPI had shed nearly 40% in about five weeks through late July, yet remains up 57% year-to-date. Background The recent correction, which began in May, was amplified by a wave of deleveraging in single-stock ETFs, leaving technical pressure heavy even as fundamentals improved. James Ooi, market strategist at Tiger Brokers, noted that the unwinding of those leveraged products appears to have eased technical strain, allowing fundamentals to regain influence. Foreign investors, who offloaded 9.862 trillion won in July, reversed course on Wednesday with net purchases of 1,446.3 billion won ($1.02 billion), according to exchange data. The won strengthened for a third straight day, reaching 1,420.8 per dollar on the onshore platform, up nearly 1% over the past three sessions. Why It Matters The rebound signals that the market's violent correction may be bottoming out, with valuations now more attractive after the steep slide. Yet Ooi cautioned that deleveraging in memory-related stocks is still underway and could keep volatility elevated, even as selling pressure eases. Easing oil prices are providing a tailwind by alleviating inflation concerns, which could support consumer sentiment and corporate margins. The KOSPI's heavy concentration in a few mega-cap chipmakers means their fortunes still dictate the index's direction. What's Next Markets are pricing in a near 70% chance of a 25-basis-point rate hike at the Bank of Korea's next policy meeting later this month. Minutes from the central bank's July meeting showed policymakers saw a need for further tightening, but the timing and pace will depend on incoming data. In debt markets, September futures on three-year treasury bonds gained 0.24 point to 103.57, while the three-year yield fell 7.7 basis points to 3.665% and the 10-year yield dropped 10.1 basis points to 4.148%. Investors will watch whether chip demand and oil prices sustain the current momentum.