U.S. Court Blocks Trump Tariffs: Market Reacts with Uncertainty

U.S. stock futures rose and the dollar strengthened after a federal court blocked Trump's tariffs. However, the decision remains subject to appeal. Analysts note the market's cautious optimism, with predictions focusing on potential judicial reversals and ongoing U.S. domestic tariff debates.

U.S. stock futures saw a boost while the dollar surged against traditional safe-haven currencies like the yen and Swiss franc after a federal court halted President Trump's proposed tariffs. The Trump administration is expected to make an appeal.

The S&P 500 E-mini futures advanced by 1.5%, and the U.S. dollar gained 0.7% against the yen. According to Matt Simpson, senior market analyst at City Index, the involvement of the Supreme Court is likely, casting today's ruling as a temporary stop rather than a definitive conclusion. Investors, meanwhile, are relieved by the pause in economic uncertainty.

Market analysts share mixed views on the ruling's implications. Hirofumi Suzuki, chief FX strategist at SMBC, points out that the administration is likely to continue its legal recourse and pursue appeals. While the dollar initially strengthened post-ruling, Suzuki cautions against predicting a prolonged rise, considering potential judicial reversals.

Sean Callow from ITC Markets finds the market's reaction surprising, as the U.S. dollar, instead of riskier currencies like the Australian and New Zealand dollars, emerged as the principal beneficiary. Ray Attrill, head of FX Strategy at NAB, remains skeptical about the court's decision resulting in significant market reversals, labeling the situation as either a fleeting market event or a potentially significant development.

(With inputs from agencies.)