Source : THE AGE NEWS
By Stan Choe
A big rally for stocks that began in Asia is easing off the accelerator amid uncertainty about what will happen next after a US court blocked many of President Donald Trump’s sweeping tariffs.
The S&P 500 rose 0.1 per cent in afternoon trading after giving up most of an earlier gain. The Dow Jones was down 25 points, or 0.1 per cent in mid-afternoon trade, and the Nasdaq composite was mostly unchanged. The Australian sharemarket is set to retreat, with futures at 5am AEST pointing to a fall of 27 points, or 0.3 per cent, at the open. The ASX added 0.2 per cent on Thursday after the Trump announcement was made early in the session.
Wall Street’s early rally faded by mid-afternoon.Credit: AP
Wall Street’s retreat is a downshift after global stocks initially leaped nearly 2 per cent in Tokyo and Seoul, where markets had the first chance to react to the ruling late Wednesday by the US Court of International Trade. It said that the 1977 International Emergency Economic Powers Act that Trump cited for ordering massive increases in taxes on imports from around the world does not authorise the use of tariffs.
The ruling raised hopes in financial markets that a hamstrung Trump would not be able to drive the economy into a recession with his tariffs, which had threatened to grind down on global trade and raise prices for consumers already sick of high inflation. Trump has said he wants to bring manufacturing jobs back to the United States, and he warned the process could cause some pain for US households.
But the White House filed notice of appeal, and the long-term outcome of legal disputes over tariffs remains uncertain. The court’s ruling also affects only some of Trump’s tariffs, not those on foreign steel, aluminum and autos, which were invoked under a different law.
Trump “is still able to impose significant and wide-ranging tariffs over the longer-term through other means,” according to Ulrike Hoffmann-Burchardi, chief investment officer of global equities at UBS Global Wealth Management.
Such uncertainty helped dampen the excitement in financial markets as trading headed through Europe into the United States, where the moves were much more modest than in Asia. The US court’s move was nevertheless seen as a positive for financial markets.
“The bar is raised for President Trump to resurrect his tariffs,” said Brian Jacobsen, chief economist at Annex Wealth Management.
“Markets are pricing that this is a better type of uncertainty than what we’ve had since Liberation Day,” which is what Trump called his April 2 announcement of a worldwide set of sweeping tariffs.
The S&P 500 has pulled within 4 per cent of its all-time high after dropping roughly 20 per cent below at one point last month.
On Wall Street, tech stocks led the way after Nvidia once again topped analysts’ expectations for profit and revenue in the latest quarter.
The chip company has grown into one of the US stock market’s largest and most influential stocks because of the frenzy around artificial-intelligence technology, and its 2.9 per cent rise was the strongest force by far lifting the S&P 500.
C3ai, an AI application software company, jumped 24.2 per cent after it reported stronger profit than analysts expected for its latest quarter. It also said the US Air Force increased the maximum possible value for its contract by $US350 million ($543 million) to $US450 million. The company’s revenue last quarter totaled $US108.7 million.
E.l.f. Beauty was another big winner and rose 24.9 per cent after the cosmetics company delivered a stronger profit for the latest quarter than analysts expected. It also said it agreed to buy Hailey Bieber’s Rhode skincare brand in a $US1 billion deal. Rhode had $US212 million in net sales in the 12 months through March.
Bieber, a model and the wife of singer Justin Bieber, will be Rhode’s chief creative officer and head of innovation and also a strategic advisor to the combined companies.
They helped offset a drop for Best Buy, which fell 8.7 per cent even though it reported a stronger profit than expected. Its revenue fell short of analysts’ forecasts.
The electronics retailer also cut its forecasted ranges for revenue and profit over the full year on the assumption that “tariffs stay at the current levels for the rest of the year, and there is no material change in consumer behaviour from the trends we have seen in recent quarters,” chief financial officer Matt Bilunas said.
Many companies have recently said that the uncertainty caused by tariffs is making it too difficult to offer any financial forecasts for the upcoming year.
In the bond market, Treasury yields eased following some mixed reports on the economy. One said that the US economy likely shrunk by less in the first three months of the year than earlier estimated. Another said slightly more US workers applied for unemployment benefits last week than economists expected.
The yield on the 10-year Treasury fell to 4.43 per cent from 4.47 per cent late Wednesday. The two-year Treasury yield, which moves more closely with expectations for where the Federal Reserve will take overnight interest rates, slipped to 3.94 per cent from 3.96 per cent.
In stock markets abroad, Japan’s Nikkei 225 jumped 1.9 per cent to help lead Asian markets higher, while stocks rose 1.4 per cent in Hong Kong and 0.7 per cent in Shanghai. South Korea’s Kospi rallied 1.9 per cent after the Bank of Korea cut its key interest rate to ease pressure on the economy.
The moves for European stocks were much more muted. France’s CAC 40 fell 0.1 per cent, and Germany’s DAX swung from an early gain to a dip of 0.4 per cent.
AP
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