The US Court of International Trade threw the cat among the pigeons when it ruled President Donald Trump’s Liberation Day tariff regime was unlawful, although the White House is playing down its importance and the ruling has been put on hold pending an appeal.
After an initial rally across Asia on the court decision, investors are slightly more sceptical with stocks on Wall Street nudging higher and European bourses a touch weaker, while data revisions showing the US economy shrank less than earlier estimates prompted a rally in bond markets, pushing yields lower.
Amid the tariff turmoil, chipmaker Nvidia continued its march higher after delivering a better-than-expected quarterly result, although it’s facing fresh criticism that it’s too close to China.
And as the domestic shoulder earnings season draws to a close, with results expected from Third Age Health Services and Pacific Edge today, the S&P/NZX 50 index is poised to notch up its first monthly gain of the year.
Calm down
Stocks on Wall Street pared earlier gains, with the S&P 500 up 0.3% in late trading, as investors dialled back their initial exuberance over a trade court's decision that President Trump’s global tariff was unlawful.
The White House played down the ruling’s importance, saying it will appeal the decision and has other levers to use in the interim, and the Court of Appeals has put things on hold until it hears the administration’s challenge.
“Risk sentiment received a boost after a US trade court invalidated President Trump’s ‘liberation day’ tariffs, deeming them illegal,” Bank of New Zealand senior interest rate strategist Stuart Ritson said in a note. “However, the S&P retraced from the highs and the dollar reversed course overnight.”
The kiwi dollar rose to 59.84 US cents at 7am in Auckland from 59.42 cents yesterday.
The tariff regime has been a tricky course for firms to navigate, with many companies cutting their outlooks in the recent earnings season. Among the latest bemoaning the import levies and their chilling impact include electronics retailer Best Buy and printer maker HP, which slid 7.7% and 8.1% respectively.
Elf Beauty pulled its guidance under the tariff cloud, but the shares surged more than 20% after delivering better earnings than expected and said it would buy Hayley Bieber’s skincare line for US$1 billion.
Not so close
Meanwhile, mega-cap stock Nvidia was up 2.8% in late trading after reporting stronger-than-expected quarter earnings, shrugging off the hit from a ban on selling H20 chips to Chinese buyers.
The chipmaker at the forefront of the artificial intelligence revolution has been accused of being too close to China by US lawmakers, with the Wall Street Journal reporting complaints that a planned facility in Shanghai risks giving China access to the bleeding edge technology.
And the yield on 10-year US Treasuries fell 8 basis points to 4.65% after data revisions showed the world’s biggest economy shrank an annualised 0.2% in the March quarter, less than the initial estimates.
Australian futures are pointing to a 0.3% decline for the S&P/ASX 200 index as the antipodean markets head into the end of the month. New Zealand’s S&P/NZX 50 index is poised for its first monthly gain of the year, up 3.2% so far this month.
The March earnings season comes to a close today with smaller firms the last to file their reports, including Third Age Health and Pacific Edge.
Local data today include ANZ’s consumer confidence report and Statistics New Zealand’s April building consent figures, which come after the government yesterday outlined plans to reform resource management law.
Reporting by Paul McBeth. Image from Saúl Bucio on Unsplash.
