[Good Morning Market] US-China Trade Tensions Flare Up Again... KOSPI Lacks Clear Direction

On October 15, the KOSPI is expected to show a directionless trend amid renewed trade tensions between the United States and China.

In the previous trading day on the New York Stock Exchange, the Dow Jones Industrial Average closed at 46,270.46, up 202.88 points (0.44%) from the previous session. The S&P 500 Index ended at 6,644.31, down 10.41 points (0.16%), and the tech-heavy Nasdaq Composite finished at 22,521.70, down 172.91 points (0.76%), respectively.

The New York stock market opened with a sharp drop of over 1% due to renewed US-China tensions following sanctions on Chinese shipbuilding companies. During the session, the market rebounded thanks to dovish remarks from Federal Reserve Chair Jerome Powell. However, in late trading, news that US President Donald Trump was considering a ban on imports of Chinese edible oil products put renewed downward pressure on the market, resulting in a mixed close.

Recently, the US stock market has entered a correction phase as investors took profits, especially from large-cap artificial intelligence (AI) stocks. However, market experts view the current tension as part of a "hardline versus hardline" strategy aimed at gaining leverage ahead of a summit. The ongoing hardline stance between the US and China is seen as an effort by both sides to secure an upper hand in negotiations, particularly in the run-up to or following the Asia-Pacific Economic Cooperation (APEC) summit at the end of October, where a meeting between President Trump and Chinese President Xi Jinping could take place.

Additionally, the continued dovish stance of the Federal Reserve is seen as a factor calming market anxiety. The previous day, Chair Powell expressed more concern about the slowdown in the labor market than about inflation, suggesting the possibility of ending quantitative tightening (QT) within a few months. This has fueled expectations of interest rate cuts and is supporting risk appetite in the market.

In the previous session, the domestic stock market hit a new record high in early trading after Samsung Electronics announced an earnings surprise (third-quarter operating profit of 12.1 trillion won, versus the consensus of 10.1 trillion won). However, both the KOSPI (-0.6%) and KOSDAQ (-1.5%) ended lower due to profit-taking in semiconductor stocks and concerns over Chinese sanctions on the shipbuilding sector.

Today's (October 15) session is also expected to face pressure from President Trump's tough rhetoric against China and weakness in the Philadelphia Semiconductor Index (-2.3%). However, with dovish comments from Chair Powell and the perception that domestic semiconductor stocks have fallen excessively, both upward and downward factors are present, making it likely that the market will continue to move without a clear direction in the short term.

Han Ji-young, a researcher at Kiwoom Securities, commented, "While US-China tensions are a short-term burden on the Korean stock market, the Federal Reserve has entered a rate-cutting cycle, so a repeat of the sharp declines seen during the 2018 US-China trade dispute or the April 2025 tariff-driven sell-off is unlikely."

He also noted, "The clear improvement in earnings among major domestic companies is a positive sign. The earnings recovery in leading sectors such as semiconductors is expected to support the downside of the index. Therefore, if a short-term correction occurs, a strategy of strategic, gradual buying that takes into account the improving profit cycle is appropriate."