New York Stock Exchange closes lower...White House: "New reciprocal tariffs effective August 1" [Morning Briefing]

◆ New York Stock Exchange closes weak as profit-taking follows Microsoft's $4 trillion market cap milestone

The three major indices of the New York Stock Exchange closed lower. On the 31st local time, the Dow Jones Industrial Average ended the session at 44,130.98, down 0.74% from the previous close. The S&P 500 closed at 6,339.39, down 0.37%, while the Nasdaq was down 0.03% at 21,122.45. The main indices started strong on positive earnings reports from Microsoft (MS) and Meta, but as Microsoft's market capitalization surpassed $4 trillion during the day, profit-taking set in and erased most of the earlier gains. Additionally, US President Donald Trump issued an executive order pressuring major pharmaceutical companies to lower drug prices, which heightened risk aversion and eventually led the indices to end in negative territory.

◆ White House: "New reciprocal tariffs effective August 1...Trump to sign executive order"

The White House, on the 31st local time, reaffirmed that the new reciprocal tariffs set by President Trump are scheduled to take effect from August 1. White House Press Secretary Karoline Leavitt stated during a briefing that "if deals are not reached by midnight tonight, reciprocal tariff rates will take effect from August 1." Based on the timing of tariff implementations in President Trump's executive orders, reciprocal tariffs are expected to begin to be levied from 12:01 a.m. on the 1st of next month.

Leavitt explained that countries like South Korea, Japan, and the European Union (EU), which have already completed trade negotiations with the US, will have "tailored trade agreements" signed by President Trump and that a 15% reciprocal tariff will apply as agreed. She also said that other countries that have not concluded an agreement with the US or have received tariff-related letters will be notified by tonight’s midnight deadline. President Trump is expected to sign the executive order later today or in the late evening. Leavitt added, "Over 200 countries worldwide have tried to contact our trade and tariffs team. We have prioritized negotiations with key trading partners and have already concluded customized agreements with two-thirds of 18 countries." She further noted, "Countries that have not yet been notified will receive communication in the form of a letter or executive order by midnight tonight." According to her, "Foreign leaders recognize that the August 1 deadline becomes a real issue for them as of tomorrow and are calling President Trump, bringing proposals to the negotiation table."

Leavitt also stated that President Trump has sent letters to CEOs of 17 major pharmaceutical companies in the US to push for lower domestic drug prices. Trump published these letters on his social media platform, Truth Social, warning in the letters that "If you fail to act, we will use every means possible to protect American families from continued exorbitant drug prices."

◆ First Korea-US Foreign Ministers' Meeting..."Firm commitment to complete denuclearization of North Korea"

On the 31st local time, Foreign Minister Cho Hyun met with Secretary of State Marco Rubio at the Department of State building in Washington, D.C., confirming their shared goal of the complete denuclearization of North Korea and agreeing to strengthen trilateral cooperation among South Korea, the US, and Japan. In a press release after the meeting, the Department of State reported that the two ministers "reaffirmed their strong commitment to the complete denuclearization of North Korea and full implementation of international sanctions, and expressed serious concerns over increased military cooperation between North Korea and Russia." They emphasized that "maintaining peace and stability across the Taiwan Strait is an indispensable factor for international security and prosperity." The Department of State also stated that the two discussed the importance of continuing to advance trilateral cooperation between South Korea, the US, and Japan, which plays an essential role in deterrence and resilience against regional security threats. Both ministers also welcomed the recent trade agreement announced the previous day and the upcoming visit of President Lee Jae-myung to Washington, D.C. Based on this, it is expected that the two ministers coordinated President Lee's US visit schedule and agenda to host the first summit with President Donald Trump.

◆ Former Minister Lee Sang-min detained for alleged conspiracy to commit insurrection..."Concern over destruction of evidence"

An arrest warrant has been issued for Lee Sang-min, the former Minister of the Interior and Safety, who is suspected of conspiring to commit insurrection in connection with the December 3 emergency martial law. Judge Jung Jae-wook of the Seoul Central District Court, responsible for warrant cases, conducted a pretrial interrogation and issued the warrant on the 1st, citing "concerns over destruction of evidence." Following former Minister of National Defense Kim Yong-hyun, Lee becomes the second cabinet member of the Yoon Suk-yeol administration to be detained in relation to the martial law incident. The special prosecutor's team believes that although Lee was the minister in charge of the Ministry of the Interior and Safety, which governs martial law during peacetime, he failed to prevent the illegal proclamation of martial law and in fact practically condoned it. He delivered orders for power and water cutoffs to media outlets via the National Police Agency and the National Fire Agency, thus violating freedom of the press and public rights to safety and life, and is suspected to have taken part in the insurrection-related crimes of former President Yoon in succession. Accordingly, the special prosecutor applied the charge of "major involvement in insurrection" to Lee, interpreting his actions as directing or engaging in key insurrection-related missions.

◆ Heatwave and tropical nights continue... daytime highs up to 37°C

On Friday, the 1st, most areas nationwide will see clouds from time to time, with temperatures above average, leading to continued heatwave conditions. Many regions will also experience tropical nights, where temperatures remain at 25°C or higher from 6 p.m. until 9 a.m. the next day. As of 5 a.m., Seoul recorded 28.0°C, Incheon 27.6°C, Suwon 25.7°C, Chuncheon 24.3°C, Gangneung 25.3°C, Cheongju 27.2°C, Daejeon 25.2°C, Jeonju 25.2°C, Gwangju 25.4°C, Jeju 27.8°C, Daegu 24.0°C, Busan 26.4°C, Ulsan 23.6°C, and Changwon 24.8°C. Maximum daytime temperatures are forecast to range from 30 to 37°C. As the heatwave warning remains in effect nationwide, the apparent temperature will also rise to around 35°C, making conditions very hot. With a high possibility of heat-related illnesses, it is important to avoid outdoor activities and outings, and to manage food thoroughly to prevent food poisoning. Fine dust concentrations are expected to remain at 'good' to 'moderate' levels across all regions thanks to smooth air dispersion.

Kim Ye-rang, Hankyung.com journalist yesrang@hankyung.com