[Good Morning Stock Market] 'China Tariff Reduction' New York Stock Exchange Closes at All-Time High... Domestic Market Also Expected to Rise

[Image source=Yonhap News]

[Asia Economy Reporter Ji-hwan Park] Major indices on the New York Stock Exchange rose on news of China reducing tariffs on U.S. products. On the 6th (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 29,379.77, up 88.92 points (0.30%) from the previous session. The Tariff Commission of the State Council of China announced that starting from the 14th, tariff rates on approximately $75 billion worth of U.S. products will be cut in half. Products that previously had a 10% tariff will see it reduced to 5%, and those with a 5% tariff will be lowered to 2.5%. Domestic stock markets are also expected to continue their upward trend for the time being as positive momentum from the U.S.-China trade dispute spreads.

◆ Hainhwan Meritz Securities Researcher= The financial market trend following the tariff rate reduction is a typical signal of economic recovery. There was a significant rebound in cyclical sectors, along with a rise in U.S. Treasury yields, strengthening of emerging market currencies (Korean won, yuan), and an increase in oil prices immediately after China's tariff cut announcement. Currently, the domestic stock market is being led by gains in cyclical sectors. However, in the U.S. stock market, cyclical sectors are weak while IT and communication services are leading the gains. Although a temporary economic recovery signal appeared following China's tariff cut announcement, considering that the FICC (bonds, exchange rates, commodities) market reversed this, the rebound in cyclical sectors is expected to be short-lived. Rather, as favorable conditions for Risk-On are provided, the strength of existing leading stocks is expected to continue.

◆ Wonil Jeong Yuanta Securities Researcher= Positive momentum regarding the trade dispute is also beginning to take hold. China's tariff reduction issue alone can be seen as a factor that raises expectations for global trade momentum. Considering the current status of China and the U.S., China appears to be making considerable concessions to the U.S. As a result, the trade dispute issue is leaning more toward resolution rather than deterioration. This phenomenon, occurring simultaneously with a self-sustaining economic rebound momentum, can be positively evaluated in terms of global trade. Stability in the yuan, which had shown weakness amid persistent uncertainty throughout last year, can also be expected.