[Good Morning Market] New York Stocks Mixed on Powell's Caution... Korea Positive on Tariff Deal

The New York Stock Exchange showed mixed results. This was influenced by Jerome Powell, Chair of the US Federal Reserve (Fed), who took a cautious stance regarding additional interest rate cuts within the year. On October 30, the domestic stock market is expected to show a positive trend due to the conclusion of the Korea-US tariff negotiations.

Yonhap News Agency

On the 29th (local time) at the New York Stock Exchange, the blue-chip-focused Dow Jones Industrial Average fell by 74.37 points (0.16%) to close at 47,632.2. The large-cap S&P 500 Index ended trading at 6,890.59, down 0.3 points (less than 0.1%). In contrast, the tech-heavy Nasdaq Index jumped 130.98 points (0.55%) to close at 23,958.473, once again reaching an all-time high.

The Fed lowered the federal funds rate by 0.25 percentage points to an annual range of 3.75-4.0%. This marks the second consecutive rate cut. The Fed also decided to end quantitative tightening (QT), which began in June 2022, in December this year. However, Powell poured cold water on the market by stating at a press conference that "a rate cut in December should not be taken as a given."

Since the market had anticipated a rate cut in December, Powell's remarks were interpreted as hawkish (favoring monetary tightening). Gong Dongrak, a researcher at Daishin Securities, said, "Unlike the rate cut and the statement, Powell's press conference took a completely different direction," adding, "Based on differences of opinion within the Fed, he clarified that an immediate rate cut in December is not certain." He continued, "He emphasized that there are strongly differing views among committee members, citing the freeze proposal that was presented as one of the minority opinions during this rate decision process."

Although the New York Stock Exchange showed mixed results, the Korean stock market is expected to see a positive trend due to the conclusion of the tariff negotiations. The previous day, South Korea and the United States concluded tariff negotiations centered on a 'US$350 billion investment package' for the US.

Lee Kyungmin, a researcher at Daishin Securities, said, "Through this Korea-US summit, it is assessed that Korea's correlation with the US-led industrial and technology alliance system has increased," adding, "The mid- to long-term fundamentals of shipbuilding, defense, and nuclear power sectors, which were referred to as 'Trump trades' earlier this year, are expected to remain solid."

Hwang Sanhae, a researcher at LS Securities, said, "The recent market rally has been mainly driven by the artificial intelligence (AI) investment cycle, and has not shown significant correlation with the economy, geopolitics, or trade," adding, "However, the resolution of risk factors, especially the removal of trade risks that had been suppressing profit outlooks for export-oriented stocks, is a positive development."

Jo Yeonju, a researcher at NH Investment & Securities, said, "We expect the Korean stock market to maintain its upward trend as concerns over tariff uncertainty and a weak won have eased," but also noted, "However, it is necessary to consider that some of the expectations from the negotiations have already been partially reflected in the market." She added, "Nevertheless, given that the impact of the Korea-US tariff negotiations on the foreign exchange market is limited, there is still ample room for further gains in the KOSPI."