The Nasdaq Composite Index surged more than 12% on the 9th (local time). The Dow Jones Industrial Average reclaimed the 40,000 mark, and the Standard & Poor's (S&P) 500 Index jumped 9.52%, marking the largest single-day gain since the global financial crisis of 2008.
This was the result of President Donald Trump deciding to suspend tariffs imposed on countries excluding China for 90 days. The so-called "Trump Put"—the notion that President Trump's words and actions serve as a bullish factor for the stock market—materialized as the market had anticipated.
Individual investors in U.S. stocks, known as 'Seohakgaemi,' who had been frustrated by the deep drop, were able to find relief early on the 10th in Korean time. Some expressed discontent over President Trump’s change of stance to encourage stock buying just a day after claiming there would be no negotiations.
President Trump announced the countries subject to universal and mutual tariffs on the 2nd, shaking the market for a week. This left a lesson that volatility can increase significantly. For example, during the 7th and 8th, the gap between the high and low prices of the Nasdaq Composite Index was 10.2% and 8.4%, respectively. Between the possibility of negotiations before the imposition of universal and mutual tariffs and news dismissing it, hundreds of trillion won in market capitalization shifted within hours.
It is also worth noting that Samsung Electronics has lost a lot of confidence ahead of the tariffs. Samsung Electronics provisionally reported sales of 79 trillion won and operating profit of 6.6 trillion won in the first quarter (January-March), exceeding market expectations. When actual results are better than predictions from securities firms, the media typically uses terms like 'earnings surprise.' Samsung Electronics has requested refraining from this expression.
It was not simply due to humility. There were concerns that if investors became overly optimistic about Samsung Electronics' earnings surprise in the first quarter, they might react even more negatively to an 'earnings shock' due to poor second-quarter (April-June) results.
Given the movements to accumulate inventory before the tariffs were implemented in the first quarter of this year, it seems that the second-quarter results were somewhat reflected in advance. However, the decline of Samsung Electronics' semiconductor business and the underperformance of its foundry business appear to be the real reasons for the shaken confidence. According to the global market research firm Counterpoint Research, SK hynix rose to first place in the DRAM market, surpassing Samsung Electronics in the first quarter of this year.
Although the Trump administration's tariff policy has at least avoided the worst, it is too early to feel relieved. The U.S.-China trade war is still ongoing. In 2018, the trade war rattled the markets for over six months. Moreover, President Trump has been in office for less than three months, and he could introduce semiconductor tariffs at any time.
For reference, it took the Standard & Poor's (S&P) 500 Index 301 days to recover from previous highs during bear markets over the past 10 years. The KOSPI index required 550 days. Additionally, the KOSPI index has yet to regain its historic high recorded in July 2021. The same goes for Samsung Electronics.