U.S. court decision halts Trump's tariffs, sparking cautious optimism among Asian markets
United States stock futures surged on May 29, while Asia's financial markets reacted cautiously after a federal court in the U.S. blocked President Donald Trump's "Liberation Day" tariffs from being implemented. The ruling, handed down on May 28, determined that Mr. Trump overstepped his authority in imposing across-the-board duties on imports from countries with an unfavorable trade balance.
The US Court of International Trade's decision dents the president's ambitious trade policy, as the court found unlawful the use of the International Emergency Economic Powers Act to impose tariffs. The White House is expected to appeal the ruling, but this may not prevent Mr. Trump from reconsidering the highest tariff levels he had threatened amidst uncertain political landscapes.
Market participants seem to be sensing an opportunity, with the cautious optimism reverberating in the Asian markets. Japan's Nikkei gained 1.4%, while South Korea's Kospi added 1.2% and Taiwan's Taiex index rose 0.5%. However, stock indices in Hong Kong, China, and Australia remained flat, while Singapore's Straits Times Index dipped 0.1% by 9:55 am.
Earlier in the day, S&P 500 futures climbed 1.5%, and Nasdaq futures increased 1.8% on strong earnings results from Nvidia. The chipmaker and AI pioneer surpassed sales estimates and projected robust revenues for the current quarter, causing its shares to increase by 4.4% after hours. However, this positive sentiment was partially offset by reports that the White House had ordered U.S. firms that provide software for semiconductor design to cease selling services to Chinese groups, and that the U.S. had suspended sales of critical technologies to China, including jet engines, semiconductors, and certain chemicals.
The US dollar strengthened against safe-haven peers, rising 0.7% against the Japanese yen and 0.8% against the Swiss franc. While the legal battle between the Trump administration and the court may gesture toward increased tension, it stands to reduce uncertainties surrounding trade policy and potentially bolster investor confidence.
[1] Linden, T. (2020, May 29). US trade court blocks Trump's 'Liberation Day' tariffs. Retrieved from https://www.reuters.com/article/us-usa-trade-tariffs-idUSKBN22J06Z[2] Rhee, J. (2020, May 29). Trump bristles at 'Taco trade' that bets on him backing down. Retrieved from https://www.straitstimes.com/business/stock-market-bonds/tapping-ours-essence-singapore-iras-used-obstinate-oleum-tax-strategy-journalist
- The unexpected court ruling on Trump's tariffs could significantly impact the business sector, as the general-news regarding the US Court of International Trade's decision dents the president's ambitious trade policy and may potentially bolster investor confidence in finance markets.
- Amidst the politically charged landscape, the surge in US stock futures and Asia's cautious optimism in financial markets could be a reflection of the Trumponomics' influence on business, with the legal battle between the administration and the court potentially offering a indication of the broad economic impacts on general-news and finance.
