[Good Morning Market] U.S. Stocks Falter on Trump’s Tariff Letters... Korean Market Also Expected to Open Lower

The New York stock market declined. This was influenced by U.S. President Donald Trump sending tariff letters to major trading partners, including South Korea and Japan. It is expected that the Korean stock market on July 8 will also be affected by the decline in the New York stock market.

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On July 7 (local time), the Dow Jones Industrial Average, which is centered on blue-chip stocks, fell by 422.17 points (0.94%) from the previous trading day to close at 44,406.36. The S&P 500 Index, focused on large-cap stocks, dropped by 49.37 points (0.79%) to 6,229.98. The Nasdaq Index, which is centered on technology stocks, also ended the session down 188.59 points (0.92%) at 20,412.52.

The tariff letters sent by President Trump to major trading partners had an impact on the decline of the New York stock market. Through the social networking service Truth Social, he disclosed the tariff letters sent to the leaders of South Korea and Japan and announced that a reciprocal tariff of 25% would be imposed on both countries starting August 1.

Kim Ji-won, a researcher at KB Securities, explained, "The sending of Trump's tariff letters reignited trade tensions, causing the three major indices to fall by nearly 1%. However, since this was an expected negative factor, the extent of the drop was limited. The impact was also contained compared to the shock from the high tariff announcement in April, as the implementation date was extended to August, leaving room for negotiation."

It is expected that the Korean stock market will also open lower due to the aftereffects of the decline in the New York stock market. Han Ji-young, a researcher at Kiwoom Securities, said, "After opening lower due to the weakness in the U.S. stock market following Trump's reciprocal tariff announcement, the market is expected to see a tug-of-war around the 3,000-point level as it digests Samsung Electronics’ preliminary earnings and tariff-related news flow during the session. Recently, after the record rally in June, the KOSPI has entered a consolidation phase, using various factors such as tariffs and macroeconomic issues as justification."

He also predicted that sector rotation would occur. Han noted, "As seen in the sharp changes in the prices of former leading and neglected stocks over the past two trading days, the rapid sector rotation is a notable feature. If additional upward momentum for the index does not materialize, it suggests that a sector rotation market driven by individual factors will continue."