[Good Morning Stock Market] Easing of US Mutual Tariff Concerns... Korea's Key to Recovery is Trading Volume

Hyundai Motor's $21 Billion U.S. Investment Spurs Related Stocks
Caution Advised Ahead of April 2 Tariff Uncertainty

On the 25th, the domestic stock market is expected to start higher, supported by the surge in the U.S. stock market due to eased concerns over reciprocal tariffs.

Earlier, on the 24th (local time), the New York stock market closed higher across the board after U.S. President Donald Trump stated that reciprocal tariffs could be waived for certain countries. The Dow Jones Industrial Average, focused on blue-chip stocks, rose 597.97 points (1.42%) to close at 42,583.32. The S&P 500, centered on large-cap stocks, ended at 5,767.57, up 100.01 points (1.76%). The Nasdaq Composite surged 404.54 points (2.27%) to finish at 18,188.59, buoyed by strong performances from tech stocks including Tesla (11.9%).

Reuters Yonhap News

Ji-won Kim, a researcher at KB Securities, analyzed, "The U.S. stock market surged as expectations for flexibility in Trump's tariffs were extended. Hyundai Motor Group’s announcement of a $21 billion investment plan in the U.S. through 2028, among other reciprocal tariff countermeasures, is expected to have a positive impact on related stocks."

On the same day, Chung Eui-sun, Chairman of Hyundai Motor Group, attracted attention by unveiling a new $21 billion (approximately 31 trillion KRW) investment plan in the U.S. over the next four years, including the establishment of a steel plant in Louisiana, at the White House. This move came about a week before President Trump’s announcement of country-specific reciprocal tariffs scheduled for April 2, representing a direct challenge. By sourcing steel locally for vehicles, Hyundai can avoid the '25% steel and aluminum tariffs' that took effect on March 12, thereby enhancing price competitiveness. President Trump praised Hyundai as a "truly great company," stating, "Hyundai produces steel and cars in the U.S., so they do not have to pay tariffs."

Ji-young Han and Seong-hoon Lee, researchers at Kiwoom Securities, explained, "Today, the domestic stock market is expected to start higher, supported by the surge in the U.S. stock market due to eased concerns over reciprocal tariffs and Hyundai’s large-scale investment easing tariff concerns for Korea. Considering the strong performance of previously heavily sold-off U.S. electric vehicle and quantum computing stocks such as Tesla and IonQ, related stocks in the domestic market are likely to offer short-term trading opportunities."

However, given that Korea ranks as the eighth largest trade deficit partner from the U.S. perspective, some point out that it will not be easy to avoid the reciprocal tariff bomb from the outset. Researcher Kim noted, "Tariff uncertainties still remain, so volatility will continue. Domestic political instability and the strong won-dollar exchange rate trend are also burdens for the domestic stock market. Attention should be paid to whether the foreign buying momentum, which sharply decreased the previous day, improves."

Whether the domestic stock market’s trading volume recovers is also a key factor to watch. The previous day’s KOSPI trading volume was about 6.8 trillion KRW, nearly half of the 13.9 trillion KRW recorded on the 21st. It is also significantly below the average trading volume of 11.8 trillion KRW since March. During the same period, the KOSDAQ remained at 5.3 trillion KRW, below both the 7.7 trillion KRW on the 21st and the average trading volume of 6.9 trillion KRW since March.

Researchers Han and Lee pointed out, "The sharp decline in trading volume was due to a combination of factors including the domestic semiconductor stocks’ weakness following Micron’s plunge last Friday, uncertainties over Trump’s tariffs, and the schedule of the domestic Constitutional Court ruling. Considering that some of the related uncertainties and stock price shocks have already been absorbed, the domestic stock market is likely to show an upward trend accompanied by a recovery in trading volume today."