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The US stock market has opened in positive territory on Thursday after President Trump’s sweeping global tariffs were blocked by the federal court.
Having earlier shown up to a 1.5 per cent climb for the S&P 500 and closer to 2 per cent for the Nasdaq in futures trading, both indices opened slightly lower than that - but still 0.8 per cent and 1.3 per cent higher respectively. The Dow Jones opened largely flat.
Though US equities have pushed higher since President Trump’s pause on the levies in April, the S&P 500 remains flat for the year as a whole as a result of steep drops in the wake of the “Liberation Day” tariffs.
Overnight trading in chipmaker behemoth Nvidia boosted those numbers stateside, with the company up more than five per cent to reclaim the crown of most valuable listed company in the world when markets opened.
Meanwhile, overnight stock markets in Asia rose on the news, with the Nikkei 225 and Hong Kong’s Hang Seng up 1.9 per cent and 1.35 per cent respectively.
However, European markets have not taken the news quite as positively, with the UK’s FTSE 100 flat in morning trading, the FTSE 250 up only 0.25 per cent and in Europe, the CAC 40 in France and Dax in Germany up by 0.6 and 0.5 per cent respectively, as of 10am BST.
The US court that blocked the levies said the “tariff orders exceed any authority granted to the president”.
A spokesperson for the White House retorted that it was “not for elected judges to decide how to properly address a national emergency” and said it would appeal.
Analysts at Barclays expect an appeal could potentially mean up to eight weeks of tariff “limbo” - which stock markets habitually do not like. However, the tariffs place extra cost burdens on companies and, eventually, consumers, also bring too much uncertainty and risk.
“For the court to determine that President Trump didn’t have the authority to impose the ‘Liberation Day’ tariffs is a pretty seismic development,” said Russ Mould, investment director at AJ Bell.
“That the [stock market] gains were measured rather than blockbuster reflects a healthy level of scepticism over whether this can truly rein in the Trump administration, which has already launched an appeal.
“The problem for investors is it could prolong uncertainty even if, ultimately, it results in a better outcome from a market perspective. It also exacerbates the issue of how the big tax cuts being brought forward in the US will be funded – given revenue from tariffs was supposed to help on this front.”
Along with the movement of the globe’s major stock markets across the rest of this week, there will now again be increased focus on bond markets.
President Trump’s hand was effectively forced into pausing the tariffs last month when US bond yields shot up, while this week a weaker than expected auction from the Japanese government for 40-year bonds also raised concerns.