[Good Morning Market] Trump Withdraws 'AI Chip Export Controls'... Korean Stock Market Expected to Open Higher

On May 8, the KOSPI is expected to open higher, led by stocks related to artificial intelligence (AI) semiconductors, following news that U.S. President Donald Trump has withdrawn export controls on AI semiconductors.

In the previous trading session, the Dow Jones Industrial Average in New York closed at 41,113.97, up 284.97 points (0.70%) from the previous session. The S&P 500 index rose 24.37 points (0.43%) to close at 5,631.28, while the tech-heavy Nasdaq Composite Index finished at 17,738.16, up 48.50 points (0.27%).

The New York stock market showed strength early in the session on expectations of high-level U.S.-China trade negotiations, accompanied by a stronger dollar and falling Treasury yields. However, when Trump responded "No" to a question about lifting tariffs on China, confirming his hardline stance, the Nasdaq reversed its gains and turned lower during the session.

Immediately after the release of the Federal Open Market Committee (FOMC) statement, the stock indices widened their losses due to changes in the statement highlighting increased risks to the economy, inflation, and unemployment. However, the tone turned more favorable during a press conference by Jerome Powell, chair of the U.S. Federal Reserve. The Fed kept the benchmark interest rate unchanged at 4.25-4.5%, which was in line with market consensus.

Expectations for U.S.-China trade negotiations, which have recently driven a technical rebound in the New York stock market, remain ongoing. Later this week, high-level talks between the U.S. and China regarding trade negotiations are scheduled to take place in Switzerland. Given remarks from the Chinese side emphasizing the importance of the U.S. stance, and Trump's firm statement that he has no intention of lifting tariffs on China, the general consensus is that it will be difficult to expect dramatic progress in trade negotiations at this meeting. However, the continued flow of news fueling optimism about U.S.-China negotiations is seen as a positive factor.

The main factor that lifted the New York market late in the session was the Trump administration's announcement of the withdrawal of export controls on AI chips. News of the repeal of semiconductor export restrictions, which were set to take effect on May 15, led to a 3.1% rise in Nvidia and a 2.4% increase in Broadcom, with the Philadelphia Semiconductor Index climbing 1.7%. The withdrawal of semiconductor chip export controls is expected to provide a boost to AI-related stocks in Asian markets at the start of trading today.

On the previous day, the domestic stock market was volatile until mid-session due to caution ahead of the May FOMC and geopolitical risks. However, optimism about high-level U.S.-China talks and news of a reserve requirement ratio cut in China strengthened risk appetite, leading both major indices to close higher in the latter part of the session.

Lee Sunghoon, a researcher at Kiwoom Securities, commented, "Today, the domestic stock market is expected to open higher, led by AI semiconductor stocks, following the market-expected outcome of the May FOMC and the Trump administration's withdrawal of AI semiconductor export regulations." He added, "Since April, foreign net buying of KOSPI stocks had not been recorded for two consecutive trading days, but yesterday, foreigners made net purchases of 340 billion KRW in KOSPI. It will be important to watch whether foreign capital continues to flow into the market today."