[Good Morning Market] Korean Stock Market Surpasses Tariff Hurdle, Policy Events in Focus

On August 1, the domestic stock market is expected to continue a differentiated trend by stock, with investors closely monitoring major corporate earnings announcements.

Overnight in New York, on July 31 (local time), the stock market opened higher, reflecting the 'surprise earnings' of Microsoft (MS) and Meta Platforms. However, as caution grew over inflation and employment indicators that exceeded expectations, all major indices closed lower. The blue-chip Dow Jones Industrial Average fell by 330.3 points (0.74%) to 44,130.98. The large-cap S&P 500 Index dropped 23.51 points (0.37%) to 6,339.39. The tech-heavy Nasdaq Index declined by 7.23 points (0.03%) to close at 21,122.45.

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The impending expiration of the mutual tariff suspension, just one day away, is also believed to have dampened investor sentiment. Lee Sunghoon, a researcher at Kiwoom Securities, commented, "After peaking this week, the influence of tariff-related news on the stock market is expected to become somewhat limited. However, from this point onward, the market's sensitivity to economic and inflation data, which can confirm the effects of general and mutual tariffs, will likely increase."

Following the Korea-US tariff negotiations, the gap between beneficiary and neglected sectors has become even more pronounced, suggesting a continued trend of sectoral differentiation for the time being. In the previous session, beneficiary sectors such as shipbuilding, defense, and nuclear power rose, while there was heavy selling in sectors like automobiles, steel, and secondary batteries.

Lee added, "Today, the domestic stock market is expected to maintain a differentiated trend by stock, as investors keep an eye on the July US employment data, the August 1 export-import figures, and major corporate earnings announcements. After the Korea-US tariff agreement, the rotation between export stocks affected by tariffs (such as semiconductors, secondary batteries, and automobiles) and those insulated from tariffs (such as shipbuilding, defense, and nuclear power) is likely to continue."

The impact of tax law revision issues on the stock market is also a point to watch, as the new government announced its 2025 tax reform plan the previous day, which includes tightening the criteria for major shareholder transfer taxes and raising the maximum corporate tax rate. In addition, the second revision of the Commercial Act is scheduled for a plenary session vote on August 4, and the results of the Morgan Stanley Capital International (MSCI) August regular review will be released on August 8.

Han Jiyeong, a researcher at Kiwoom Securities, noted, "With the revisions to the Commercial Act and the tax reform plan largely concluded, attention should now turn to the industrial policies within the economic policy direction to be announced this month. If the creation of a National Growth Fund of over 100 trillion won, policies for energy transition to meet AI power demand, and the fostering of eco-friendly industries are concretized, related stocks in AI, renewable energy, electric power equipment, and energy storage systems (ESS) may once again come into focus."