ASX closes at three-month high after US court blocks Trump tariffs

Australian investors are holding out for Donald Trump’s next move after a US trade court blocked his “Liberation Day” tariffs from going into effect on Thursday, ruling that the president had overstepped his authority.

The Court of International Trade’s three-judge panel ruled on several lawsuits arguing Trump exceeded his authority, casting doubt on trade policies that have jolted global financial markets, frustrated trade partners and raised uncertainty over the outlook for inflation and the global economy. Trump will appeal the decision.

Wall Street is awaiting Nvidia’s latest results, which will drop after the closing bell.Credit: AP

Many of the President’s double-digit tariff hikes are paused for up to 90 days to allow time for trade negotiations, but the uncertainty over their eventual outcome has stymied businesses and left consumers wary about what lies ahead.

Goldman Sachs chief US political economist Alec Phillips observed that the ruling “represents a setback for the administration’s tariff plans and increases uncertainty but might not change the final outcome for most major US trading partners”. Phillips said he expected Trump would “find other ways to impose tariffs”.

Locally, investors reacted positively to the news, though their outlook was tempered. The Australian sharemarket edged up, with the S&P 200 gaining 12.9 points or 0.2 per cent to 8409.8, a three-month high. Futures pointed to gains on Wall Street as markets in Asia also rallied.

“Just when traders thought they’d seen every twist in the tariff saga, the gavel dropped like a lightning bolt over the Pacific,” Stephen Innes of SPI Asset Management commented as news of the ruling broke. It was, at the least, “a brief respite before the next thunderclap,” he said.

Portfolio manager at Ten Cap, Jun Bei Liu said that while the court’s ruling was good news, Australian investors have dealt with enough of Trump’s governance to wait and see how his appeal will fare before acting triumphant.

“Clearly there will be more to come... but the sentiment is a push in the short term,” Liu said, adding that the ASX has become more resilient to the swings of Trump’s tariff talks since they were first announced. Liu said we were more likely to see individual companies and sectors slowing from future Trump trade outbursts rather than entire markets crashing.

“We’re past the full uncertainty now,” Liu said. “Now that there’s this trade shock out of the way, we’re just working on the details.”

Seven of the 11 industry sectors on the ASX advanced, powered by energy companies, banks and tech stocks, which were helped by upbeat earnings from AI giant Nvidia after the close of trading on Wall Street.

However, the local market failed to track the rally in US futures following the court decision as falls in mining and real estate stocks were limiting its gains. The Australian dollar was down 0.1 per cent at US64.20¢.

Fossil fuel stocks had another strong session, with oil and gas giant Woodside climbing another 2.8 per cent after the Albanese government on Wednesday gave its preliminary approval for the company to keep its controversial giant North West Shelf project in Western Australia running until 2070. Smaller rival Santos closed 1.5 per cent higher, while coalminer Yancoal rose 0.4 per cent. Whitehaven Coal was the only company of the four largest in the sector to close lower, sinking 0.4 per cent.

Tech stocks rose, with WiseTech up 1.2 per cent, TechnologyOne up 1.9 per cent, and location tracking app Life360 climbing 2.1 per cent. Data centre operator NextDC gained 3.1 per cent when markets opened but has dropped 1.1 per cent by market close. The sector’s gains come as shares in US artificial intelligence bellwether Nvidia rose 4.9 per cent in after-hours trading in New York after the company delivered a solid revenue forecast.

The finance sector, which makes up almost a third of the ASX, also finished upward, with all the Big Four banks closing higher.

Meanwhile, the materials sector declined. Iron ore miners BHP and Rio Tinto dropped 0.8 per cent and 0.7 per cent respectively. Gold miners Northern Star Resources slipped 0.7 per cent and Newmont shed 0.6 per cent as demand for the safe-haven investment bullion softened.

US market futures jumped 1.6 per cent in response to the US court decision blocking Trump’s trade war. Throughout Thursday, Australian investors added commentary on the impacts of the ruling.

“More details are needed,” Rodrigo Catril, a strategist at National Australia Bank in Sydney, said.

“Particularly whether there is an injunction or whether this goes to an appeal process and tariffs remain in place for now. The best guess at this stage is that the administration has enough powers to bypass the ruling and implement tariffs on several grounds.”

Melbourne-based senior financial market analyst at Capital.com Kyle Rodda, said Trump’s new tariff block would probably end up in the Supreme Court.

“It’s a situation fraught with danger because the administration may ignore the court’s ruling, potentially placing greater strain on US institutions at a time of increased stress,” Rodda said.

“However, should the markets get their way, the courts could delay and then deny these tariffs, removing one massive risk and undoubtedly stoking risk appetite.”

The latest market twist follows a choppy day for Wall Street as anxieties permeated around the bond market and the US government’s mounting debt. The S&P 500 finished down 2.60 points, or less than 0.1 per cent, putting the benchmark index on track for its worst week in the last seven. The Dow Jones also closed almost unchanged, while the Nasdaq composite rose 0.3 per cent.

With AP, Bloomberg, Reuters

The Market Recap newsletter is a wrap of the day’s trading. Get it each weekday afternoon.