Stocks, Dollar Rally As Trump Tariffs Hit Court Roadblock

European stocks and Wall Street futures rose on Thursday after a U.S. federal court blocked President Donald Trump’s so-called “Liberation Day” tariffs from going into effect, sending the dollar up on safe-haven currencies.

The little-known Manhattan-based Court of International Trade ruled that Trump overstepped his authority by imposing his April 2 across-the-board duties on imports from U.S. trading partners.

The White House quickly appealed the decision, and could take it all the way to the Supreme Court if needed. But in the meantime, it offered some hope that Trump might back away from the highest tariff levels he had threatened.

“The ruling has brought a temporary sense of relief to the markets, even as uncertainty lingers over whether the administration will fully comply,” said James Leong, chief executive officer at Grasshopper Asia.

“While volatility has eased for now, the lack of clarity around the government’s response could reignite market turbulence. Until the Supreme Court provides a definitive ruling, we’re unlikely to see a lasting resolution,” he added.

The ruling could also encourage U.S. trading partners to stall any trade negotiations they are having with the White House while they wait to see how the case is resolved.

However, analysts at Goldman Sachs noted the order does not block sectoral levies, and there were other legal avenues for Trump to impose across-the-board and country-specific tariffs.

“This ruling represents a setback for the administration’s tariff plans and increases uncertainty but might not change the final outcome for most major U.S. trading partners,” analyst Alec Phillips wrote in a note.

Europe’s STOXX 600 index (.STOXX), was up 0.3% in early London trade.

U.S. markets looked primed for a stronger reaction with S&P 500 futures last up 1.6%. Nasdaq futures were up 2%, also benefiting from relief over earnings from Nvidia (.NVDA.O), which beat sales estimates.

But Britain’s FTSE 100 index (.FTSE), shrugged off the news and was last down 0.1%.

“Is this a sign that stock markets in countries who did manage to score trade deals with the US in recent weeks, could be at a disadvantage if tariffs are reversed? This could be a short-term theme to watch,” said Kathleen Brooks, research director at XTB.

Britain was the first country to secure a trade deal with the U.S. and will hold talks with Washington next week to speed up the implementation of that deal, the Financial Times reported.

Earlier in Asia, Japan’s Nikkei (.N225), rose 1.9%, while South Korean shares (.KS11), climbed 1.9% to a nine-month high. Chinese blue chips (.CSI300), firmed 0.6%.

SAFE HAVENS TAKE A BACKSEAT

The news of the court decision hit traditional safe-haven currencies, which have benefitted from tariff fears punishing the U.S. dollar.

The dollar gained nearly 1% against the Japanese yen . It later eased and but remained up 0.3%. The dollar was, meanwhile, up 0.4% against the Swiss franc .

Another beneficiary of dollar woes, the euro dropped as much as 0.7% and was last down 0.2% against the greenback.

U.S. Treasury yields rose, adding to the pressure on the market unnerved by Trump’s hefty tax and spend bill, which passed the House of Representatives last week.

Yields on 10-year Treasuries , which move inversely with prices, were up 4 basis points to 4.52% and markets further shaved the chance of a Federal Reserve rate cut anytime soon.

Longer-dated, 30-year yields held above the closely-watched 5% level.

Minutes of the last Fed meeting showed “almost all participants commented on the risk that inflation could prove to be more persistent than expected” due to Trump’s tariffs.

A rate cut in July is now seen as around a 20% chance, while September has come in at around 60%, having been more than fully priced a month ago.

In commodity markets, gold was down 0.2% to $3,283 an ounce .

Oil prices extended a rally first begun on supply concerns as OPEC+ agreed to leave its output policy unchanged and the U.S. barred Chevron (CVX.N), from exporting Venezuelan crude.

Brent rose $1 to $65.9 a barrel, while U.S. crude rose similarly to $62.84 per barrel.

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