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Stocks Navigate Mixed Signals as Tariff Worries Persist; Sectors with Potential Recovery in the Spotlight
Seoul (Yonhap) — South Korea’s markets are bracing for a mixed performance on July 21 as investors closely monitor ongoing tariff negotiations from the Trump administration. Experts recommend turning attention to undervalued stocks that have been hit hard by earnings-related anxieties.
On July 18, the KOSPI index slightly dipped despite upbeat U.S. consumer data, as profit-taking from recent peaks weighed on the sentiment. The KOSPI closed the session in the 3,180 range, marking a decline of 0.13% and wrapping up the week at 3,188.07. Net individual sales worth ₩341 billion contributed to the downtrend, with signals of cautious trading activity.
After hitting a three-year-and-ten-month high of 3,200 on July 14, the KOSPI has faced difficulties maintaining upward momentum, falling short of this psychological threshold for three consecutive sessions. Key stock movements included SK Hynix [000660], which extended its losses for a fourth day, slipping below ₩270,000, while Samsung Electronics gained 0.60%, buoyed by foreign investor inflows and reaching ₩67,000, thereby preventing sharper declines in the broader market.
Wall Street Wobbles Amid New Tariff Threats; Semiconductor Stocks Take a Hit
U.S. stock markets closed on a mixed note last week as investor sentiment faltered following reports that President Donald Trump proposed imposing 15% tariffs on goods targeted in negotiations with the European Union. The Dow Jones Industrial Average dropped by 0.32%, the S&P 500 edged down 0.01%, while the Nasdaq ticked up by 0.05%.
The revelation of Trump suggesting 15-20% tariffs—down from a previously pitched figure of 30%—sparked apprehension. While the reduced rates initially seemed more palatable, analysts viewed them as higher than anticipated, dispelling hopes the earlier number was merely a bargaining tactic. Wall Street remained cautious, with shares of Nvidia slipping by 0.34%, contributing to a 0.09% decline in the Philadelphia Semiconductor Index.
On the brighter side, the University of Michigan Consumer Sentiment Index posted modest growth in July, hitting a five-month high. This tempered some of the market's tariff-induced fears, though uncertainty persisted.
South Korean Market Grapples with Two-Way Sentiment as Tariff Deadline Nears
With the August 1 tariff deadline approaching, South Korean markets are expected to see divergent performances across individual stocks. Han Ji-young, a researcher at Kiwoom Securities, observed that while stronger consumer sentiment indicators suggest that universal tariffs may only have a limited macroeconomic impact, persistent tariff-related noise is tempering optimism.
“Tariff renegotiations with nations like Japan and South Korea remain fraught with hurdles,” Han commented. However, there appears to be a silver lining in ongoing U.S.-China developments. Reports have surfaced that Presidents Donald Trump and Xi Jinping might meet at the APEC summit in Gyeongju this October. Such discussions have sparked renewed buying interest amid speculation that this summit could pave the way for agreements on core issues, including tariffs, rare earth materials, and the semiconductor trade.
Earnings Reports and Oversold Sectors Take Center Stage
As earnings season gains traction, analysts warn that stocks with overly optimistic valuations could face selling pressure, particularly after results are announced. Opportunities may emerge in sectors that remain undervalued despite strong fundamentals.
Lee Kyung-min of Daishin Securities shared insights, stating, “At current market levels near annual highs, share prices are more vulnerable to disappointing results or conservative forward guidance.” He emphasized the potential in beaten-down sectors like automobiles, healthcare, and media, which could offer attractive entry points.
“For stocks already factoring in earnings-related uncertainties, actual results could act as a catalyst for recovery, alleviating investor concerns,” Lee added.
China’s Rate Decisions Could Influence Global Sentiment
Amid this backdrop, global investors are keeping a close eye on China's monetary policy, particularly its Loan Prime Rate (LPR) decision. As a key benchmark interest rate, the LPR is expected to play a pivotal role in determining market direction in the coming weeks. Analysts predict that any surprise changes to the LPR could spark responses from multiple asset classes, adding another layer to an already complex market landscape.
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