[Market View] Continued U.S. Tariffs and Recession Fears… KOSPI Holds Up But "Not Easy"

# Trump Reverses Announcement of Additional Tariffs on Canada, Shaking New York Stock Exchange Overnight # U.S. February CPI Concerns Rise Amid Recession Fears; Limited Rebound Expected for KOSPI SEOUL—Younah Kwak reports (Yonhap News Agency): On the 12th, the domestic stock market is expected to exhibit a limited upward trend despite attempts to rebound, amid ongoing fears of U.S.-imposed tariffs and recession, as well as cautious sentiment concerning U.S. inflation data. On the previous day, the KOSPI index started with a decline of 2.02%, but recouped some losses due to bargain buying, closing at 2,537.60, down 1.28% from the previous session. Although concerns persist regarding Trump’s high-intensity tariff policies, the market seems to be building resilience against repeated threats, establishing a bottom around the 2,500 level. Bargain buying may continue today, potentially prompting the index to attempt a rebound. However, the lack of momentum aside from bargain buying might limit the extent of this rebound. The New York Stock Exchange's atmosphere remains troubled. Overnight, the Dow Jones Industrial Average fell by 1.14%, while the S&P 500 and Nasdaq Composite indices decreased by 0.76% and 0.18%, respectively. Initially, the New York stock market showed attempts to recover from the previous day's sharp decline. However, during the session, President Donald Trump criticized Ontario’s electricity surcharge for exports to the U.S. and announced an additional 25% tariff on Canadian steel and aluminum, leading to an immediate expansion of the market's losses. Subsequently, Ontario declared its intention to halt the electricity surcharge, and President Trump stated that he would reconsider the additional tariffs, which helped reduce the market’s losses again. While the Trump administration’s tariff threats have persisted since his inauguration in January, the New York Stock Exchange still struggles to adapt, reacting sharply to each of Trump’s statements. Amid fears of a U.S. economic recession due to stringent tariff policies, market caution is growing regarding the U.S. Consumer Price Index (CPI) for February, set to be announced tonight (9:30 PM Korean time). The market expects a 2.9% year-on-year increase. If the CPI does not deviate significantly from expectations and positive interpretations of the detailed data emerge, there is hope that recession fears will ease, potentially supporting a rebound in the index. Han Ji-young, a researcher at Kiwoom Securities, stated, “The domestic stock market will attempt to rebound due to the news of the cancellation of retaliatory tariff policies between Trump and Canada, but concerns over the February CPI will limit the rebound momentum. However, the fact that the domestic stock market has been outperforming the U.S. market since March provides some relief to domestic investors.” Additionally, given the high-level talks between the U.S. and Ukraine last night, which led to a 30-day ceasefire agreement in the Russia-Ukraine war, attention should be paid to the price movements of reconstruction-related stocks in the domestic market today.