Markets surged amidst a setback for Trump's tariffs in the courts
Asia's stock markets and Wall Street futures soared on Thursday following the U.S. Court of International Trade's (CIT) decision to block President Donald Trump's proposed "Liberation Day" tariffs. The ruling was based on the argument that Trump exceeded his authority by imposing the tariffs across-the-board on imports from U.S. trade partners.
The White House quickly appealed the decision, potentially escalating the legal battle up to the Supreme Court. For now, the ruling offered a glimmer of hope that Trump might reconsider the high tariff levels he had threatened. Kyle Rodda, a senior financial analyst at Capital.com, suggested that if the markets prevailed, the courts could delay and potentially deny these tariffs, removing a substantial risk and boosting investor confidence.
However, analysts at Goldman Sachs highlighted that the order does not prevent sectoral levies and there are alternative legal avenues for Trump to implement across-the-board and country-specific tariffs. In other words, while the court's decision represents a setback for the administration's tariff agenda, the final outcome for major U.S. trading partners remains uncertain.
Investors reacted favorably, with Japan's Nikkei rising 1.7% and South Korean shares gaining 1.8% to a nine-month high. Asia-Pacific shares, excluding Japan, edged up 0.5%, while Chinese blue chips firmed 0.6%. European and U.S. markets also showed strong gains, with S&P 500 futures climbing 1.6% and Nasdaq futures rising 2.0%.
Elsewhere, China's progress in paragliding may have equaled a world record, although by accident. Meanwhile, middle East conflicts involving the U.S. and Israel continued to unfold, with complex food aid regimes taking shape in Gaza.
In related news, Nvidia reported better-than-expected sales, which helped offset a report that the White House had ordered U.S. firms offering semiconductor design software to stop selling to Chinese companies. Additionally, the U.S. reportedly suspended some sales to China of critical technologies, including jet engines, semiconductors, and certain chemicals.
The ruling in favor of halting the tariffs impacted traditional safe haven currencies, causing the dollar to rise 0.7% against the Swiss franc to 0.8327. It gained 0.7% against the Japanese yen to 145.86 yen, while the euro dipped 0.4% to $1.1245. The court decision also led to a 3 basis point increase in yields on 10-year Treasuries, further reducing the chances of a Federal Reserve rate cut in July, currently standing at 22%.
Gold slipped 0.5% to $3,271 an ounce, while oil prices continued to rally, with Brent rising 96 cents to $65.87 a barrel and U.S. crude climbing $1 to $62.84 per barrel.
- The ruling by the U.S. Court of International Trade to block President Trump's proposed tariffs has given a glimmer of hope to investors, potentially boosting confidence in equities markets and trading.
- Kyle Rodda, a senior financial analyst at Capital.com, speculates that if the markets prevail, the courts could delay and potentially deny the tariffs, removing a substantial risk from investing.
- Goldman Sachs analysts, however, point out that the order does not prevent sectoral levies and there are alternative legal avenues for Trump to implement tariffs, keeping the final outcome uncertain for major U.S. trading partners.
- In addition to the court decision, Nvidia's better-than-expected sales have helped offset some negative impacts on revenue from the ongoing US-China trade tensions in the finance sector.
- The court decision impacted traditional safe haven currencies, causing the dollar to rise against the Swiss franc, Japanese yen, and euro, while gold prices dipped and oil prices continued to rally.
