Reignited Tariff War: Will the US Stock Market Be Shaken... Eyes on Employment Data [New York Stock Market Weekly Outlook]

Source

Korea Economic Daily

Summary

It was reported that President Trump's announcement of an increase in tariffs on foreign steel could heighten volatility in the New York stock market.
It was pointed out that if the May nonfarm payrolls data falls short of market expectations, investor sentiment could contract.
Attention is being paid to tech stock volatility depending on earnings announcements from technology companies such as Broadcom.

Trump's 'Steel Tariff Bomb' Raises Market Tension

May Nonfarm Payrolls Expected at 125,000

Major Indicators Like ISM Manufacturing and Services PMI on Hold

Broadcom Earnings Release... Attention on Tech Stock Volatility

Donald Trump, President of the United States, delivers a speech at the United States Steel Corporation plant in the outskirts of Pittsburgh, Pennsylvania, on the 30th of last month (local time). On this day, he announced an increase in tariffs on imported foreign steel products to the United States from 25% to 50%. (Photo=AP)

This week (2nd to 6th, local time), the New York stock market is expected to be influenced mainly by the aftereffects of President Donald Trump's steel tariff hike and the release of nonfarm payroll data.

After the market closed on the 30th of last month, President Trump made a surprise announcement during his visit to the United States Steel Corporation plant in Pittsburgh, Pennsylvania, that tariffs on foreign steel would be doubled from the existing 25% to 50% starting from the 4th. In response, the European Union (EU) stated, "We are ready to take additional measures in response to this US action," escalating the possibility of the recently quieted tariff war reigniting.

Uncertainties over the US-China trade talks are also adding to the volatility. On the same day, President Trump referred to the agreement between the US and China to lower tariffs for 90 days, claiming, "China has totally violated this agreement." China, in turn, stated, "The US is taking discriminatory actions against China."

With signs of a slowdown in US domestic consumption recently, market attention is also focusing on key economic indicators scheduled for release this week. On the 2nd, the Institute for Supply Management (ISM) will release the May manufacturing Purchasing Managers' Index (PMI), and on the 4th, the services PMI will be announced. On the same day, the Federal Reserve System (Fed) will unveil its Beige Book on the economic situation.

The main market focus is the release of the May nonfarm payrolls on the 6th. According to FactSet, about 125,000 new jobs are expected to have been created in May, down from 177,000 in April. If the employment data meets or exceeds expectations, the market shock can be absorbed, but falling short may lead to a sharp deterioration in investor sentiment.

Corporate earnings announcements continue as well. On the 5th, American semiconductor company Broadcom Inc. is scheduled to release its Q1 results.

Reporter Da-Yeon Lim allopen@hankyung.com