[Good Morning Stock Market] Tariff Risks Reignite... "Limited Volatility Expected for Korean Market"

Key Events to Watch: Nvidia Earnings, FOMC Minutes, and More

On May 26, the domestic stock market is expected to continue showing sector-specific divergence, influenced by tariff-related noise originating from the United States, as well as changes in government bond yields and exchange rates.

Previously, on May 23 (local time), the New York stock market closed lower across the board due to remarks by U.S. President Donald Trump about raising tariffs on the European Union (EU), as well as caution ahead of the market holiday on May 26. The Dow Jones Industrial Average, which is focused on blue-chip stocks, fell by 256.02 points (0.61%) to close at 41,603.07. The S&P 500 Index, which is centered on large-cap stocks, dropped by 39.19 points (0.67%) to 5,802.82. The Nasdaq Index, which is focused on technology stocks, declined by 188.53 points (1.00%) to 18,737.21.

AFP Yonhap News

Kim Seokhwan, a researcher at Mirae Asset Securities, commented, "President Trump increased market volatility by threatening to impose a 50% tariff on the EU and announcing a 25% tariff on Apple's iPhones." Apple's share price dropped by 3%, and MicroStrategy's stock fell by more than 7% after it was revealed that the company had incurred an unrealized loss of $6 billion on its Bitcoin holdings in the first quarter.

Ross Mayfield, an investment strategist at Baird, noted, "Over the past six weeks, the market has experienced one of the strongest six-week rallies in the past 75 years, fueled by hopes of easing tariff conflicts." However, he also pointed out, "The renewed rhetoric about trade wars could threaten this momentum."

However, some analysts believe that President Trump's tariff remarks are likely being used as a negotiation leverage tool, and therefore, the impact on the stock market will be limited. Han Jiyeong, a researcher at Kiwoom Securities, explained, "After a period of relative silence on tariffs, Trump has once again injected tariff risk into the market." Nevertheless, he added, "It is appropriate to view this as causing only limited volatility, rather than disrupting the overall market direction." He suggested a projected KOSPI range of 2,540 to 2,650 for this week.

Another key point to watch is whether the earnings results of artificial intelligence (AI) technology companies will serve as a catalyst for a rebound in investor sentiment. After the market closes on May 28 (local time), earnings reports are scheduled for Nvidia, Salesforce, and HP. Han also pointed out, "The earnings results of Nvidia, which has significant influence over AI-related stocks such as those in high-bandwidth memory (HBM) and power device sectors that have recently been generating alpha, cannot be overlooked." He added, "While the medium-term growth outlook for AI stocks remains intact, the recent sharp rebound in share prices has raised earnings expectations once again. In addition, Trump's semiconductor tariffs and regulatory noise could trigger temporary volatility after the earnings announcements, so it would be prudent to approach these stocks with a split-buying strategy."

Key events scheduled for this week include the Bank of Korea's Monetary Policy Board meeting for May and the release of the minutes from the May U.S. Federal Open Market Committee (FOMC) meeting, both on May 29. The Personal Consumption Expenditures (PCE) price index for April will be announced on May 30.