[Good Morning Stock Market] US Stocks Plummet Amid Nvidia Setbacks and Powell Ignored... Korean Stocks Also Expected to Decline

The New York stock market fell due to AI chip export controls to China and remarks by Federal Reserve (Fed) Chair Jerome Powell. On the 17th, the Korean stock market is also expected to start lower amid concerns over the US-China trade war and a sharp decline in semiconductor stocks.

Reuters Yonhap News

On the 16th (local time) in the New York stock market, the Dow Jones Industrial Average, centered on blue-chip stocks, closed at 39,669.39, down 699.57 points (1.73%) from the previous trading day. The S&P 500, focused on large-cap stocks, fell 120.93 points (2.24%) to 5,275.7, and the tech-heavy Nasdaq dropped 516.01 points (3.07%) to 16,307.16.

The US Department of Commerce restricted Nvidia chip exports to China, increasing concerns about the US-China trade war. Nvidia announced that it was notified that US Department of Commerce approval is required when exporting the H20 chip to China. As a result, Nvidia's stock plunged 6.87% to $104.49. Additionally, AMD disclosed that its MI308 semiconductor has become subject to export controls to China. Its stock price fell 7.35%.

Furthermore, remarks by Fed Chair Powell negatively impacted the stock market. Powell said, "The level of tariff increases announced by the administration so far is much higher than expected," adding, "The economic impact is likely to be similarly significant, including rising inflation and slower growth." He continued, "We may face a challenging scenario where our two main goals (maximum employment and price stability) are in tension."

Seonghun Lee, a researcher at Kiwoom Securities, explained, "As the US-China standoff continues, the market had been gradually raising expectations for a Powell (or Fed) put option. However, Powell's fundamental response that despite expected inflation and growth slowdown due to tariffs, the Fed will respond by reviewing upcoming data, implying no rate cuts for the time being, served as a reason for the market to decline, disappointing those expecting a Powell put."

The domestic stock market is also expected to be affected by the sharp drop in the New York market. Ji-won Kim, a researcher at KB Securities, analyzed, "Nvidia has forecasted about $5.5 billion in costs due to the export restrictions on the H20 chip to China, and it is inevitable that related domestic stocks will reflect this. There is also news that the Trump administration is considering delisting Chinese companies listed on the US stock market, suggesting the conflict may be prolonged."

Researcher Lee said, "The domestic market is expected to start lower, reflecting the sharp decline in semiconductor stocks in the US market the previous day amid growing concerns over the US-China trade dispute. While some of this factor was already priced in the previous day, the market is expected to recover some losses in the mid-session." He added, "Overall, since it is difficult to escape the tariff issue, the market is likely to continue to be driven by individual stocks with specific momentum today as well."