Wall Street Focuses on Progress of US–China Trade Talks [Weekly Outlook for New York Stock Exchange]

Deadline for US–China Tariff Truce Approaching on the 12th

Trump, Investors Fear Panic if Truce Not Extended

This week (4th–8th), the New York Stock Exchange is expected to closely watch the progress of trade negotiations between the United States and major economies. Last month, on the 31st, President Donald Trump of the United States sent a revised reciprocal tariff letter to 68 countries, including South Korea and the European Union (EU). Among these, 26 countries were notified of tariff rates exceeding 15%. The tariff rate for Canada (35%) took effect immediately on the 1st. For the remaining countries, it begins on the 7th.

There is also attention on how the tariff issue between the United States and China will unfold. On May 12, the US and China agreed at the Geneva negotiations to dramatically lower the tariffs they each imposed of over 100% by 115 percentage points for 90 days. At that time, the US had imposed a tariff of 145% on China, and China had imposed 125% on the US. The deadline for the tariff truce agreed upon by the US and China at the Geneva negotiations is the 12th. If President Trump does not approve an extension of the truce, the stock market could plunge into chaos.

The war situation between Russia and Ukraine is also a variable. The deadline presented by President Trump to Russia for reaching a 'ceasefire agreement with Ukraine' is the 8th.

Major economic indicator releases are also coming up. On the 5th, the Institute for Supply Management (ISM) in the US will announce the July Purchasing Managers’ Index (PMI) for the service sector. Since the service sector accounts for 70% of the US economy, this data could heighten concerns about an economic slowdown in the US.

Investors are particularly expected to pay attention to the earnings of Palantir Technologies (on the 4th) and AMD (on the 5th) this week. The earnings of Costco Wholesale and McDonald's (on the 6th), both good indicators of US consumer sentiment, are also in focus.

The assessment of a jobs shock by key figures of the Fed should not be overlooked. Lisa Cook, a Fed Board member (on the 6th), Raphael Bostic, President of the Federal Reserve Bank of Atlanta, and Alberto Musalem, President of the Federal Reserve Bank of St. Louis (both on the 7th), are scheduled to appear in public.

New York = Park Shin-young, correspondent nyusos@hankyung.com