[Good Morning Stock Market] Trump Tariff Threats Continue... KOSPI Expected to Lose Upward Momentum

On the 19th, the KOSPI is expected to see a slowdown in its upward momentum due to concerns stemming from U.S. President Donald Trump's tariff remarks.

On the previous day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 44,556.34, up 10.26 points (0.02%) from the previous session. The S&P 500 rose 14.95 points (0.24%) to 6,129.58, and the Nasdaq Composite ended the day at 20,041.26, up 14.49 points (0.07%).

The New York stock market closed mixed, digesting strong semiconductor stocks such as Intel, which surged 16.1% on expectations of a TSMC acquisition, cautious remarks from Federal Reserve (Fed) officials regarding further interest rate cuts, ongoing Russia-Ukraine ceasefire negotiations, and profit-taking in M7 stocks including Meta (-2.8%).

Although the S&P 500 hit a record high that day, it is notable that since the beginning of the year, non-U.S. markets such as KOSPI (9.5%), KOSDAQ (14.1%), Hong Kong’s Hang Seng (14.5%), and Germany’s DAX (14.8%) have outperformed the U.S., including the Nasdaq (3.8%). This suggests that these latter countries have developed resilience to negative factors and uncertainties that previously triggered adverse stock reactions, contributing to a positive price rebound.

However, given that non-U.S. markets like the KOSPI have experienced a rapid rally of around 10% since the start of the year, there is analysis that short-term speed pressures and fatigue have not been fully alleviated. Furthermore, considering that global fund managers’ average cash holdings relative to assets under management have dropped to 3.5%, the lowest level in 15 years, it is analyzed that major markets including South Korea may intermittently experience sideways consolidation phases as a breather.

Han Ji-young, a researcher at Kiwoom Securities, stated, "In the short term, among major market participants, momentum plays betting on index rises are likely to be less favored than rotation plays involving 'profit-taking in sectors with rapid short-term gains + buying in overlooked sectors.' It is appropriate to fine-tune response strategies based on this premise during the remaining weekdays in the domestic market."

Meanwhile, the domestic market started the previous day with a decline but ended with a late-session rally supported by semiconductor and defense stocks, buoyed by Samsung Electronics’ share buyback cancellation, the passage of the K-Chips Act, and hopes for a Russia-Ukraine ceasefire.

The researcher added, "Today, despite the Philadelphia Semiconductor Index’s strength (up 1.7%) due to the Intel effect and expectations of NAND price rebounds in the third quarter, the impact of Trump’s tariff remarks, surging natural gas prices, and Fed officials’ comments leading to U.S. interest rate increases will act as reasons for profit-taking on the recent market rally, causing a slowdown in intraday index momentum."