[Good Morning Market] US Stocks Rebound Led by Tech... Korean Market Also Undergoing Structural Improvement

Nvidia Becomes First Company Ever to Surpass $4 Trillion in Market Cap
Tariff Concerns Prove Unfounded... Market Responds Calmly
Korean Stock Market Expected to Continue Upward Trend Amid Sector Rotation

The US stock market rebounded, led by technology stocks. Notably, Nvidia became the first company in human history to surpass a market capitalization of $4 trillion (approximately 5,500 trillion won). This reflects a sentiment that fears over the US’s reciprocal tariff policies are unfounded. As the Korean stock market also embarks on fundamental improvements through amendments to the Commercial Act, it appears poised for an upward trend, with repeated pauses in the index and sector rotation among leading stocks.

On July 9 (local time), the S&P 500 index closed at 6,263.28, up 0.61% from the previous day. The tech-heavy Nasdaq Composite rose even more, climbing 0.94% to finish at 20,611.34. The Dow Jones Industrial Average also ended the day up 0.49% at 44,458.30.

The main driver was Nvidia, a leading artificial intelligence (AI) chipmaker, whose market cap exceeded $4 trillion. This marks a $1 trillion increase in just one year since it surpassed $3 trillion in June last year. The AI investment cycle remains robust. In addition, other technology stocks such as Meta Platforms, Microsoft, and Alphabet also showed strong performances.

Even though US President Donald Trump announced additional tariffs, the market remained largely unfazed. In fact, the resolution of uncertainty was received positively. President Trump stated the previous day on his social media platform, Truth Social, that he would not alter or postpone the high tariffs (ranging from 25% to 40%) to be imposed on products from 14 countries, including Japan and Korea. This measure will take effect from August 1. He also warned that new tariffs of 50% would be imposed on copper imports, and up to 200% tariffs could be applied to pharmaceutical imports. However, he added a caveat that there would be a grace period of about one year to one and a half years.

Nevertheless, unlike the sharp market reactions seen when reciprocal tariffs were first announced in April, there was no significant volatility this time. Market participants appear to be more focused on how long the negative effects of a universal 10% tariff will persist on the economy and corporate earnings. There is also heightened attention on the timing of future interest rate cuts, with the release of the Federal Open Market Committee (FOMC) meeting minutes scheduled for later in the day.

The previous day, the KOSPI closed at 3,133.74, marking its highest level in three years and ten months since September 17, 2021, when it reached 3,140.51. The strong sentiment is expected to continue in the market today. The MSCI Korea ETF, which closely tracks the Korean stock market, remained flat, while the Philadelphia Semiconductor Index rose by 0.44%.

Han Ji-young, a researcher at Kiwoom Securities, said, "Although eight out of the top ten stocks by market cap in the Korean stock market closed lower yesterday, momentum remains in leading sectors such as shipbuilding and defense, and expectations for government-led improvements in corporate governance are still high. While there may be some pullbacks in stock prices due to index pauses and sector rotation, as negative biases toward the Korean stock market are being dispelled, investors should respond with an expectation for further upside in the index."