Last week (July 7-11), the domestic securities market showed a solid performance despite receiving a 25% tariff letter from the Donald Trump U.S. administration. The KOSPI index, which started the week at 3054.28 points, closed at 3175.77 on the 11th. At one point during the session on the 11th, it even broke through the 3200 line. The KOSDAQ index also rose sharply, surpassing the 800 mark.
On July 7 (local time), President Trump signed an executive order extending the deadline for the reciprocal tariff implementation until next month 1, stating that he would impose a 25% reciprocal tariff on Korea and 13 other countries. Initially, the imposition was set for July 9, meaning there is now about three more weeks for negotiations to continue. There are also forecasts in the market that President Trump may change his words again.
Although the continuous delay in tariff imposition has increased uncertainty, the market showed no concern. Rather, the domestic securities market soared daily, boosted by expectations for the new government's policies. In the U.S. market, the Standard & Poor's 500 and Nasdaq indices set all-time highs last week, while the Dow Jones index also approached the record high of 40,514.04 set on December 4 of last year.
As market reactions regarding tariffs have become somewhat dull, the securities market is expected to fluctuate based on economic indicators for the time being. Experts advise paying attention to the second-quarter earnings announcements starting this week (July 14-18) and the economic indicators from major countries such as the U.S. and China.
This week, the U.S. price index and China's growth indicators will be announced. The U.S. will first announce the Consumer Price Index (CPI) on the 15th, followed by the Producer Price Index (PPI) on the 16th. China will release its export and import growth rates on the 12th, and gross domestic product (GDP), retail sales, and industrial production figures on the 15th.
Kim Yu-mi, an economist at Kiwoom Securities, noted, "The U.S. price and consumption indicators are expected to provide insights into the future direction of monetary policy by the U.S. Federal Reserve (Fed)." She analyzed that market reactions to the price index could also be sensitive.
Bloomberg projects that the U.S. June CPI will rise by 2.5%, marking an increase for the second consecutive month. The core CPI is also expected to rise by 2.9%. Both indicators are anticipated to reach their highest levels in the past four months. Experts believe that if the actual inflation rate in the U.S. shows a rebound, it could be a negative factor for the domestic securities market.
Park Seok-hyun, a researcher at Woori Bank, stated, "If the rebound in the U.S. inflation rate diminishes expectations for an interest rate cut that were initially expected in September, it will create more pressure on the Bank of Korea's proactive interest rate cut decision." He noted, "This could serve as a factor that dampens policy momentum in the domestic stock market."
Ahead of the earnings announcement season, market attention is expected to focus on the retail sales figures being released. Retail sales have shown a decline over the past two months as the surge in advance orders prior to the tariff imposition comes to an end. In June, retail sales, excluding automobiles, are expected to shift to an upward trend. If consumer sentiment shows signs of recovery, some analysts believe the securities market may again embark on an upward trajectory due to expectations of economic revitalization.
Lee Joo-hyun, an economist at DAISHIN SECURITIES, stated, "The retail sales indicators could indicate corporate capabilities and consumer sentiment." He also noted, "Expectations for the Fed's interest rate cuts may be important for market sentiment going forward."
According to local media including Xinhua News Agency, China's June exports are expected to have risen 5.1% year-on-year, improving from the previous month's 4.8%. The second-quarter GDP growth rate is anticipated to remain at the target level of 5.1%, although it is projected to slow compared to the previous quarter (+5.4%).
Kim, the economist, explained, "Certain indicators are showing signs of recovery as the Chinese government's stimulus measures take effect." However, he added, "Producer prices and the real estate market are still remaining in negative territory, highlighting the growing need for additional policy support."