South Korean stocks are expected to face a considerable amount of uncertainties and volatile sessions next week following the downgrading of the U.S. sovereign credit rating, analysts said Saturday.

Market experts said that the decision by Standard and Poor's Rating Services (S&P) to lower the credit rating of the world's largest economy one-notch from "AAA" to "AA plus" will impact the local bourse.

They said that the blow could cause the KOSPI, the country's key stock index, to lose more ground or make a comeback after overcoming the initial blow, helped by possible moves by the U.S. Federal Open Market Committee (FOMC), which will hold a meeting on Tuesday (local time). The FOMC could opt to announce a new economic stimulus plan that could restore market jitters.

Insiders here said that there will be a need to see how the market reacts since Washington said the unemployment rate for July stood at 9.1 percent with nearly 120,000 new jobs being created in the month, much more than originally anticipated. More jobs usually translates into growth, which benefits the stock market.

The KOSPI, meanwhile, plunged 8.88 percent, or 189.46 points, this week to close at 1,943.75 on Friday, mainly weighed down by the controversy surrounding the U.S. debt ceiling and its effects on the overall economy.

Mounting concerns that the U.S. economy may experience a so-called double-dip further caused the market to fall sharply, while the unfolding financial crisis in countries such as Spain and Italy exacerbated the problem.

Foreign investors shed more shares than they bought, which caused numbers to fall. 

"Recent developments make it hard to determine how the market will respond to the S&P shock at present," a local analyst said. He predicted that depending on the movement of the market early next week, experts may be able to get a better bearing on more long term developments.

Others said that the planned meeting of the Bank of Korea's Monetary Policy Committee, which sets the country's key interest rate, could influence the market.

Raising the interest rate could help stabilize inflation pressure, which has rose to 4.7 percent in July, but could adversely affect economic growth by making borrowing more costly. (Yonhap News)