US-China Trade Conflict Reignites
Surprise Additional Tariffs on Steel
New York Stock Exchange Closes Mixed
Inevitable Impact on Domestic Market
On June 2, tensions in the market heightened once again as the previously easing US-China trade conflict showed signs of intensifying.
On May 30 (local time), at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 42,270.07, up 54.34 points (0.13%) from the previous session. The S&P 500 index ended at 5,911.69, down 0.48 points (0.01%), while the Nasdaq Composite Index finished at 19,113.77, falling 62.11 points (0.32%).
On the same day, US President Donald Trump expressed his dissatisfaction with China on social media, stating, "China, perhaps not surprisingly to some, has completely violated our agreement." The stock market showed mixed results following his remarks, which came just 30 days after the tariff war truce with China.
Investor sentiment in related sectors cooled further amid foreign media reports that the Trump administration is planning broader sanctions on China's technology sector. Nvidia fell by 2.92%, while TSMC, ASML, AMD, Qualcomm, and Arm each dropped by around 2%. Tesla declined by 3.34%, despite CEO Elon Musk holding a farewell press conference at the White House that day as he left the administration.
The market's mixed trend is expected to deepen this week. This comes after President Trump imposed additional tariffs in a surprise move after the market closed last Friday. During a visit to the US Steel plant in Pittsburgh, Trump announced that tariffs on foreign steel would be raised from 25% to 50% starting this week.
The EU responded to the surprise hike by stating it is prepared to take countermeasures, saying, "This will add further uncertainty to the global economy and increase costs for consumers and businesses on both sides of the Atlantic." This signals that tariff-related uncertainty could escalate once again.
The market is closely watching the US nonfarm payroll data for May, which is set to be released this week. The aim is to gauge how much consumers and businesses have been affected by the tariff burden. If the results meet or exceed expectations, the market is expected to absorb them smoothly. However, if the results fall short, investor sentiment could be shaken.
The domestic stock market is also likely to be affected by the heightened tariff uncertainty. However, with the 21st presidential election taking place on June 3, the KOSPI is expected to fluctuate around the 2,700 level as the market contends with election-related volatility.
Han Ji-young, a researcher at Kiwoom Securities, stated, "Although changes in Trump's tariff policy are expected to drive market volatility this week, it is still difficult to see this as a major turning point for tariff uncertainty as a whole. It is appropriate to maintain the existing scenario of responding after confirming the aftershocks of the tariffs in data between June and July."
Han added, "Domestically, the presidential election is crucial. The KOSPI touched the 2,700 level in May, rising by 5.5%, not only due to the strong performance of leading sectors such as shipbuilding and defense, but also because of expectations for new government policies." He further noted, "After the election, with the disappearance of related catalysts and growing caution ahead of US employment data and a domestic market holiday later in the week, investors should be aware that short-term profit-taking may occur, particularly in sectors that have benefited from the election."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
