Trump's imposed tariffs ruled as unlawful: Stock futures surge, dollar strengthens
United States Trade Court Deems Trump's Global Tariffs Illegal, Nvidia Shares Surge
President Donald Trump's global tariffs faced a setback as the US trade court declared them illegal, sending US stock futures soaring and the dollar strengthening. This ruling, combined with upbeat earnings from Nvidia Corp., boosted investor sentiment.
Asian shares rose, with contracts for the S&P 500 and Nasdaq 100 gaining 1.6% and 2%, respectively. Equities in Japan and South Korea also advanced at the open. The Trump administration intends to appeal the tariff ruling.
The yen weakened 0.8%, while oil prices rose 0.8%. The court's decision came after a panel of three judges at the US Court of International Trade in Manhattan sided with Democratic-led states and a group of small businesses that argued Trump had wrongfully invoked an emergency law to justify some of his levies.
Nvidia's shares jumped almost 5% in post-market trading in New York, following the company's delivery of a solid revenue forecast. The equities market had been hit by a sweeping selloff after Trump's aggressive trading order remodel proposal. Trump's tariff blitz, announced on April 2, had spooked investors, who remained cautious due to concerns about the potential impact on growth.
However, the subsequent pause on the tariffs and negotiations with countries have helped stabilize the markets, bringing the MSCI All Countries World Index within striking distance of a record high. Billy Leung, senior investment strategist at Global X ETFs in Australia, commented that the tariff ruling is mostly being treated as a sentiment booster rather than a structural pivot.
Analysts noted that while the court decision removes one tactical risk before the July tariff timeline, investors are still trading cautiously. A high-stakes case that could impact trillions of dollars in global trade may ultimately be decided by the US Supreme Court.
The court's ruling suspends the vast majority of Trump's tariffs, including his global flat tariff, elevated rates on China, and fentanyl-related tariffs on China, Canada, and Mexico. However, other tariffs imposed under different powers, such as Section 232 and Section 301 levies, remain unaffected, including levies on steel, aluminum, and automobiles.
Tim Waterer, chief market analyst at KCM Trade in Sydney, stated that anything which could impede Trump's tariff agenda is generally being interpreted as good news by investors. Risk assets such as stocks are likely to be receptive to the news.
Separately, Nvidia CEO Jensen Huang alleviated investor fears about a China slowdown by delivering a robust sales forecast, emphasizing the continued growth potential of the AI computing market. On the other hand, HP Inc.'s profit outlook fell short of estimates, leading to a 15% drop in extended trading and a cut to the annual earnings forecast, signaling a weaker economy and continued costs from US tariffs on goods from China.
News reports suggested that the Trump administration is planning to restrict the sale of chip design software to China, causing a plunge in Cadence Design Systems Inc. and Synopsys Inc. shares. Meanwhile, Tesla Inc. was reported to begin its robotaxi service in Austin on June 12.
Trump has contended that Wall Street misunderstands his willingness to follow through on extreme tariff threats, describing his retreats as part of a negotiation strategy. Trump's approach involves setting a high number initially and then "going down a little bit" as part of negotiations.
Main moves in markets:
- Stocks:
- S&P 500 futures rose 1.4%
- Japan's Topix rose 1.1%
- Australia's S&P/ASX 200 rose 0.2%
- Euro Stoxx 50 futures rose 0.9%
- Currencies:
- The Bloomberg Dollar Spot Index rose 0.3%
- The euro fell 0.4% to $1.1242
- The Japanese yen fell 0.8% to 145.96 per dollar
- The offshore yuan was little changed at 7.1987 per dollar
- Cryptocurrencies:
- Bitcoin rose 0.5% to $107,870.01
- Ether rose 2.4% to $2,699.63
- Bonds:
- The yield on 10-year Treasuries advanced three basis points to 4.51%
- Japan's 10-year yield advanced 1.5 basis points to 1.525%
- Australia's 10-year yield advanced four basis points to 4.37%
- Commodities:
- West Texas Intermediate crude rose 0.8% to $62.32 a barrel
- Spot gold fell 0.8% to $3,260.25 an ounce
- Source: Reuters, CNBC, Bloomberg, Wall Street Journal.
- The US stock futures soared and the dollar strengthened, boosting investor sentiment, following the US trade court's ruling that President Donald Trump's global tariffs were illegal.
- Analysts noted that while the court decision removes one tactical risk before the July tariff timeline, investors are still trading cautiously, as a high-stakes case that could impact trillions of dollars in global trade may ultimately be decided by the US Supreme Court.
- Aside from the tariff ruling's impact on business and finance, Nvidia's shares jumped almost 5% in post-market trading in New York, following the company's delivery of a solid revenue forecast, further influencing market movements in the general-news domain.
