U.S. stock futures jumped and the dollar gained against safe-haven peers including the yen and Swiss franc on Thursday, after a U.S. federal court blocked President Donald Trump's "Liberation Day" tariffs from going into effect.
The Trump administration has appealed the ruling.
S&P 500 E-mini futures climbed 1.5% and the U.S. dollar rallied broadly against the euro, yen and Swiss franc.
Here are some quotes from market analysts:
KYLE RODDA, SENIOR FINANCIAL MARKET ANALYST, CAPITAL.COM, MELBOURNE
"It's massive news. It's long been suggested that the emergency powers Trump has used to implement tariffs were unconstitutional and that the power to enact tariffs sits with Congress."
"It sets up a battle that will likely end up the Supreme Court now. It's a situation fraught with danger because the administration may ignore the court's ruling, potentially placing greater strain on U.S. institutions at a time of increased stress."
"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."
JOSEPH CAPURSO, HEAD OF INTERNATIONAL AND SUSTAINABLE ECONOMICS, COMMONWEALTH BANK OF AUSTRALIA, SYDNEY
"One thing I will say though, is the time the news came out, it's usually a period of fairly low liquidity in currency markets... so I think that explains some of the big moves.
"(Tariffs) have been the single biggest driver of currencies the last few months, and it's probably going to remain the single biggest driver for the next few months as well. So expect lots of big swings to keep occurring. But in terms of where the general trend is, I think the U.S. dollar can strengthen a bit further."
SHOKI OMORI, CHIEF DESK STRATEGIST, MIZUHO SECURITIES, TOKYO
"Initial reaction will be risk-on for risk assets such as equities. It's likely that we will see people buying USD as a funding currency expecting that global trade will re-ramp up."
"Given that trade talks have gone this far, (the United States) won’t let countries go back to the pre-Trump era."
However, "it is good news that courts started to fight back against executive orders under rule of law."
FRANCES CHEUNG, HEAD OF FX AND RATES STRATEGY, OCBC, SINGAPORE
"For bonds and FX, the timing is convenient for an extension of the most recent trading momentum, where the dollar has already shown signs of rebounding and long-end bond yields have been facing upward pressure.
"That said, development on tariff and trade relations remains fluid. Investors may be reluctant to load heavy positions on either side of the trade."
GARY NG, SENIOR ECONOMIST, NATIXIS, HONG KONG
"The decision will fuel temporary risk-on sentiment in equities and lower bond yields as the market dials back inflation expectations driven by tariffs. However, this is not the end of the tariff story. There is no clarity as the legal battle will continue and it does not change the fact that Trump will find ways to reshape global trade order."
FRANCIS TAN, CHIEF ASIA STRATEGIST, INDOSUEZ WEALTH MANAGEMENT
"The U.S. dollar itself is quite undervalued because of concerns about U.S. deficits and debt. That should continue for a while until we get more clarity on fiscal issues."
YUNOSUKE IKEDA, HEAD OF MACRO RESEARCH, NOMURA, TOKYO
"At this point it's almost impossible to know if the tariffs will be completely unwound by this. But in the hypothetical situation that they are, it's natural to see dollar appreciation. Basically Trump's tariffs will lead to stagflation pressure on the U.S. economy, so reversing those tariffs would be a positive for the dollar."
TOHRU SASAKI, CHIEF STRATEGIST, FUKUOKA FINANCIAL GROUP, TOKYO
"The markets are buying back the dollar on the news, rather than selling the yen. But if USD/JPY continues to rise above 148, speculative JPY short position may be forced to unwind, which will push up USD/JPY much higher."
BEN BENNETT, HEAD OF INVESTMENT STRATEGY FOR ASIA, L&G ASSET MANAGEMENT , HONG KONG
"I think investors are now comfortable that deals are being done which reduces the big downside tail risk for growth. In fact, we could see a shift back to inflation concerns if the new spending bill boosts growth and the labour market remains tight. Tariffs are a part of such inflation worries, so rolling back such threats are a positive here at least. "
CHARU CHANANA, CHIEF INVESTMENT STRATEGIST, SAXO, SINGAPORE
"The ruling removes an immediate overhang, even if it is not the final word on tariffs. Trump may still have scope to appeal or impose narrower, sector-specific tariffs, so policy uncertainty lingers.
"While the court ruling is a marginal positive for sentiment and helps to clear out the most bearish growth outlook bets, it does not remove uncertainty. Businesses still don’t have clarity, and the policy path remains fluid.
We could see the market unwinding some of the tariff-related moves, such as the weaker USD and Gold, EUR, JPY and EM FX could pull back. Short-end yields may rise as recession fears ease."
MATT SIMPSON, SENIOR MARKET ANALYST, CITY INDEX, BRISBANE
"It seems inevitable the Supreme Court will be ordered to weigh in on this one, which makes today’s news more of a speedbump than a full-drawn conclusion. But for now, investors get a breather from the economic uncertainty they love to loathe."
HIROFUMI SUZUKI, CHIEF FX STRATEGIST, SMBC, TOKYO
"This block doesn't mean that policies regarding tariffs will completely stop. On the other hand, this is a domestic matter for the U.S., and I think that tariff negotiations will continue.
"In the financial markets, there's an initial reaction of a stronger dollar and weaker yen. However, considering judicial processes like appeals, I don't expect a continuous rise in the dollar."
SEAN CALLOW, SENIOR ANALYST AT ITC MARKETS, SYDNEY
"It appears as though while there must be significant caution over the ruling being overturned by higher courts, for now the weight of money is being placed on the possibility that U.S. courts prevent the White House from self-imposed economic damage, brightening U.S. growth prospects and the USD."
RAY ATTRILL, HEAD OF FX STRATEGY, NAB, SYDNEY
"We’re just trying to work out what it might mean, but obviously the market is doing a kneejerk reaction so I guess it's reversing a lot of the moves that we've seen… you know all the direction of change has been opposite to what we have seen since Liberation Day, but it's not at all clear what this means.
"The assumption is that the tariffs that have been announced and are in place will stay in place… Our assumption is President Trump will appeal this trade court's decision and he has the right to appeal... And then it will be up to the federal court and what happens there? I have no idea. So this may be an absolute storm in a teacup or potentially something more significant.
"I think it's way premature basically to say that this has the potential to reverse a lot of the moves that we've seen in the last couple of months."
