Equities rise then retreat as appeal and policy risks keep markets cautious after US court ruling
A US court ruling that blocks many of US President Donald Trump’s sweeping tariffs offered only temporary relief for financial markets.
BNN Bloomberg reports that the decision fuelled an early global rally, but the momentum faded amid continued uncertainty over trade policy and its economic impact.
According to the US Court of International Trade, the 1977 International Emergency Economic Powers Act does not authorize Trump’s use of tariffs, challenging the legal foundation for many of the import taxes implemented since April 2.
However, the Trump administration has appealed the ruling, and was initially successful in having the tariffs reinstated. The court’s decision does not cover sector-specific tariffs on steel, aluminum, or autos, which rely on other legal grounds.
Markets initially responded positively to the tariffs being struck down.
As per BNN Bloomberg, Japan’s Nikkei 225 and South Korea’s Kospi both jumped 1.9 percent, with Hong Kong gaining 1.4 percent and Shanghai up 0.7 percent.
But by the time trading reached Europe and the US, momentum waned.
France’s CAC 40 and Germany’s DAX swung to modest losses, while the S&P 500 rose 0.4 percent to 5,912.17, the Dow added 0.3 percent to 42,215.73, and the Nasdaq gained 0.4 percent to 19,175.87.
Currency and bond markets also reflected tempered enthusiasm.
According to The Globe and Mail, the US dollar fell against the yen and Swiss franc, settling at 144.11 yen and 0.8229 franc.
The 10-year Treasury yield declined to 4.43 percent from 4.47 percent after initial gains were moderated by concerns over US economic weakness and a rise in unemployment claims.
Analysts cited in both sources described the ruling as legally significant but economically limited.
According to Brad Bechtel of Jefferies, the court’s ruling was narrow, targeting only one legal mechanism, while Trump “still has plenty of other avenues” to implement tariffs.
Ulrike Hoffmann-Burchardi of UBS Global Wealth Management added that Trump remains capable of imposing “significant and wide-ranging tariffs” through other channels.
Brian Jacobsen of Annex Wealth Management said, “The bar is raised for President Trump to resurrect his tariffs.”
While markets reacted favourably at first, Jacobsen noted, “It’s always too early to turn off the news feed,” adding that even a partial unwinding of tariffs could make US fiscal policy more costly.
Other strategists warned that policy uncertainty remains entrenched.
UTO Shinohara of Mesirow Currency Management called the ruling “a microcosm of the broader uncertainty,” where conflicting developments continue to “exert a push-and-pull effect on sentiment.”
Kathleen Brooks of XTB stated the court ruling “is unlikely to boost consumer sentiment or business confidence” and may even weigh on hiring.
From a revenue perspective, Best Buy’s outlook illustrates ongoing concerns.
According to BNN Bloomberg, the retailer fell 7.3 percent after lowering its annual forecasts.
CFO Matt Bilunas said the outlook assumes that “tariffs stay at the current levels for the rest of the year,” and added that no significant shift in consumer behaviour is expected from recent trends.
Meanwhile, companies with strong earnings helped lift markets. Nvidia rose 3.2 percent following another quarter that beat expectations.
C3.ai surged 20.8 percent after reporting stronger-than-expected profits and a US Air Force contract expansion of US$350m.
E.l.f. Beauty gained 23.6 percent after announcing a US$1bn deal to acquire Hailey Bieber’s Rhode skincare brand, which reported US$212m in sales over 12 months.
Bieber will remain with the brand as chief creative officer and strategic advisor.
Despite the temporary reprieve, multiple analysts agree that risk persists.
The Globe and Mail reports that Prashant Newnaha of TD Securities expects the legal battle to continue to the Supreme Court, warning this could “lead to delays in investment and hiring.”
Frances Cheung of OCBC added that while recent momentum may extend, “investors may be reluctant to load heavy positions on either side.”
Charu Chanana of Saxo noted the ruling removes one overhang but “does not remove uncertainty,” as Trump may still pursue narrower tariff policies.
Kyle Rodda of Capital.com said the issue could lead to institutional strain, especially if the administration resists judicial limits. “It’s a situation fraught with danger,” he said.
Neuberger Berman’s Kei Okamura observed that businesses need clarity, not “stop-and-go” policies that make decade-long planning difficult.
According to Gary Ng of Natixis, the ruling “will fuel temporary risk-on sentiment in equities” but does not resolve structural trade risks.
Ray Attrill of NAB cautioned against drawing broad conclusions, saying the situation “may be an absolute storm in a teacup or potentially something more significant.”
Sources: BNN Bloomberg; The Globe and Mail; Reuters
