Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
A federal court in the US has blocked Donald Trump from imposing sweeping trade tariffs under an emergency powers law.
A three-judge panel at the court of international trade argued that Trump has exceeded his authority, left US trade policy dependent on his whims and unleashed economic chaos.
The court wrote:
There are reports that the Trump administration has filed a notice of appeal. White House officials have already publicly challenged the court’s authority n the case. A White House spokesperson told Reuters that it was “not for elected judges to decide how to properly address a national emergency”.
News that Trump’s tariffs may be unlawful was welcomed by stock markets in Asia. In Japan the Nikkei 225 index rallied by 1.9%, while in China the SSE Composite rose by 0.8% and Hong Kong’s Hang Seng rose by 1.1%. The South Korean Kospi index rallied by 1.8%.
In the UK, the blue chipFTSE100 index is also poised to rise when markets open at 8am, with futures up 0.82%.
9:30AM BST: ONS estimates of inflation for different household types
1:30PM BST: Second reading of US GDP
1:30PM BST: US weekly jobless claims
Closer to home, there are some new figures today on the rate of inflation experienced by British households.
Overall UK household costs rose by 2.6% in the year to March, according to theOffice for National Statistics.That marks a deceleration from 2.9% in the year to December 2024.
Private renters experienced the biggest rise in costs, with these households experiencing the highest annual inflation rate of 3.6% in March. Meanwhile households who owned their homes experienced an inflation rate of 1.8%, and those with a mortgage had a rate of 2.8%.
The White House is also under pressure from rising interest rates on US debt. Last week the lower house in Congress passed a tax bill funded largely by extra borrowings. It is estimated the giveaways will add $5tn to US debt levels.
Olivier Blanchard, an economics professor at theMassachussetts Institute of Technologyand a former chief economist at theInternational Monetary Fund, said the tax bill had spooked investors, and especially those that wanted to buy bonds that last 10 or 30 years, concerned that they might not get their money back.
“If I were an investor, i would worry about buying a thirty year maturity treasury [bond], because god knows what’s going to happen,” he told Bloomberg News.
“I would buy a one year [bond] because there’s not much risk. I mean, even if I think that the [tax] policy is crazy, I’m going to get my money back after one year. But if I buy a 10 year, I start saying, yeah, things could happen.
“So, the utter fiscal irresponsibility of this administration is clearly what explains higher rates.”
Anotherbumper set of quarterly results from Nvidiahas rippled over to the European stock markets too. Shares in the Dutch semiconductor equipment maker ASML have risen by 2.4% today, and the Stoxx Europe tech index has risen by 0.8%.
Over in the US, futures for the tech-heavy Nasdaq were up by as much as 2%, and shares in Nvidia itself are up 6% in pre-market trading.
Shares in Tesla, another leader in artificial intelligence technology, are also up 2.6%. Last night its chief executiveElon Musk announced he will leave his role in the Trump administration.
The chief executive of Hargreaves Lansdown, Dan Olley, is leaving the investment broker after less than two years in the top job.
Richard Flint, an independent non-executive director, will act as chief executive on an interim basis, subject to approval from the City regulator.
Olley will remain in post for a three-month handover period, and be available to the business for a further two months, Hargreaves said.
Last year the company agreed to a £5.4bn takeover by a consortium of private equity firms.
More scepticism arriving today as investors weigh whether the ruling from thetrade court in New York will be enough to block Trump from pursuing his trade tariffs.
Mark Haefele, chief investment officer atUBS Global Wealth Management, said:
Meanwhile analystsJoachim KlementandSusana Cruz, of the brokerPanmure Liberum, say the likelihood oof tariffs being cancelled has increased but is not their “base case”. They wrote:
The UK has said it wants to accelerate negotiations to conclude a trade deal with Donald Trump in the wake of the US court ruling that the sweeping tariffs he imposed on imports from more than 60 countries were illegal.
DespiteKeir Starmersealing the first deal with Trump since his so-called “liberation day” at the start of April no legal text exists to bring the concessions he won into force.
The UK is also still threatened with a 10% reciprocal tariff on all exports outside the deal which was seen as a life saver for the car and steel industries.
The business secretary,Jonathan Reynolds, is expected to meet US commerce secretaryHoward Lutnickat a meeting of theOECDin Paris next Tuesday.
A UK government spokesperson played down the US court ruling on Thursday plainly indicating it would continue to negotiate despite a technical opening to walk away from the deal.
“These are matters for the United States to determine domestically and we note this is only the first stage of legal proceedings.
“We were the first country to secure a deal with the US in a move to protect jobs across key sectors, from autos to steel, and we are working to ensure that businesses can benefit from the deal as quickly as possible,” the spokesperson said.
Trade experts have said the US court’s verdict just added more uncertainty to the global markets already heavily disrupted by the volatility of US trade policy.
“This court ruling doesn’t affect the tariffs that the UK negotiated down on cars and steel, but clearly adds another layer of complexity and uncertainty to what Trump is doing when businesses don’t know what tariffs their product would face in the US that can’t be good for the economy,” saidDavid Henig, director of think tankEuropean Centre for International Political Economy.
The EU is also in the middle of tense trade negotiations with Trump’s administration following last week’s threat to impose tariffs of 50% on all exports. It was already facing a 20% tariff on all exports as well as sectoral tariffs on autos and steel and aluminium, with both sides pausing measures and counter measures for 90 days until the beginning of July.
Its lead negotiatorMaroš Šefčovičis also expected to meet with US commerce secretary Howard Lutnick in Paris next week at the OECD council meeting with EU sources saying a call between Donald Trump on Sunday with European Commission president Ursula von der Leyen unlocking a route to proper negotiations.
Also in the UK, some bleak figures from the car manufacturing industry, where production hit its lowest monthly output in more than 70 years.
Car and commercial vehicle production dropped 15.8% to 59,203 in April, according to figures from the Society of Motor Manufacturers and Traders (SMMT). Monthly vehicle output has not been that low since 1952, excluding 2020 when the pandemic shut down most manufacturing.
The decline was because of a late Easter, SMMT said, as well as “model changeovers and lower demand in key export markets”.
The UK looks like it is losing out on the broader rally in Europe, with theFTSE100 index down slightly by 0.1%.
The online car marketplace Auto Trader is at the bottom of the index, with shares down by 12%. It reported a 5% rise in revenue to £601m in the year ended in March, below analyst expectations of £606m.
Demand for used cars has been very strong, but that has been a problem for Auto Trader. Analysts at the broker Peel Hunt write:
Investors are watching the US dollar, which is currently up 0.1% against a basket of leading currencies and is one of the top performers in the G10 forex market today, saysKathleen Brooks, a research director at the brokerXTB.
Elsewhere, the UK government has said it will require the biggest pension funds in the country to invest in British assets.
It “will take a reserve power in the Pension Schemes Bill to set binding asset allocation targets” for investments in private makets, the Treasury said on Thursday. It will also secure £27.5bn for “local investment priorities” for Local Government Pension Scheme authorities.
The government also confirmed plans to pool multiple pension funds into bigger ‘megafunds’ which manage £25bn or more in assets. It aims to consolidate the 86 administering LGPS authorities into six pools.
The Labour government has been reviewing ways to overhaul the private pension system. In May, Reeves ruled out mandating that pension funds must allocate money to British assets, after 17 pension bosses signed up to a voluntary agreement to investat least 5% of their assets in UK private markets.
Davos founder launches criminal complaint against accusers, according to a report from the Financial Times.
Klaus Schwab, the founder of the World Economic Forum, has reportedly launched a criminal complaint against the whistleblowers whose accusations led to his ousting.
Schwab founded the WEF in 1971 but stepped down in April after the board launched an investigation afterwhistleblowers reportedly accused him of manipulating research, using company funds to pay for private massages, and asking junior staff to withdraw thousands of dollars on his behalf.
The Financial Times reports this morning that Schwab said he would fight the “stupid and constructed” allegations, and that his lawyers had filed a complaint for defamation and coercion with the public prosecutor in Switzerland.
Stock markets across Europe are rallying this morning as investors wake up to news that a trade court in New York has blocked Trump’s “liberation day” tariffs.
The UK’sFTSE100 blue chip index has ticked up 0.1%, while the German Dax rallied 0.9%. France’s CAC 40 has risen 1%.
Tariffs are dominating the headlines this morning but some of the market optimism has also come from Nvidia, which reported its first quarter results last night.
The chip designer, which has been at the heart of the AI spending boom, reported a 69% surge in revenue to $44.1bn in its quarter ended on 27 April, higher than expected.
The ompany has projected revenue of $45bn in the second quarter, meeting analyst forecasts even as it said that restriction on shipments of AI chips to China would cost it $8bn in sales.
Shares in Nvidia were up 4.9% in after-hours trading.
The court in the US was not asked to address some industry-specific Trump has issued on cars, steel and aluminium under a different statute.
But analysts atDeutsche Bankthink if the court ruling is upheld, Trump could pursue his other tariffs through the same means. They wrote:
Even with the court action, Trump’s trade policies could still affect other big economies, analysts are warning.
Alec Phillips, an analyst at the investment bankGoldman Sachs, wrote:
Trump has claimed authority to set trade tariffs under the International Emergency Economic Powers Act, or “IEEPA”. The law has historically been used to impose sanctions on enemies of the US or freeze their assets. Trump is the first US president to use it to impose tariffs.
But the Court of International Trade, which is in New York, has said the US Constitution gives Congress exclusive authority to regulate commerce with other countries, and that is not overridden by the president’s emergency powers.
It has been busy in the US overnight. Elon Musk has said he will leave his role in the Trump administration.
The billionaire boss of Tesla has played a leading role at the department of government efficiency, or “DOGE”. His 130-day mandate as a special government employee in the Trump administration was set to expire about 30 May.
He had already been signalling his departure from Washington and a commitment to refocus on his businesses. He also criticised Trump’s new tax bill, calling it too expensive and a measure that would undermine his work to make the government more efficient.
Hopes that tariffs might be blocked has helped lift stocks in Asia, but there is likely to be much more uncertainty ahead, analysts say.
PrashantNewnaha, senior Asia-Pacific rates strategist, atTD Securities, said:
MeanwhileGary Ng, senior economist atNatixis, says:
YunosukeIkeda, head of macro research atNomura, said:
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
A federal court in the US has blocked Donald Trump from imposing sweeping trade tariffs under an emergency powers law.
A three-judge panel at the court of international trade argued that Trump has exceeded his authority, left US trade policy dependent on his whims and unleashed economic chaos.
The court wrote:
There are reports that the Trump administration has filed a notice of appeal. White House officials have already publicly challenged the court’s authority n the case. A White House spokesperson told Reuters that it was “not for elected judges to decide how to properly address a national emergency”.
News that Trump’s tariffs may be unlawful was welcomed by stock markets in Asia. In Japan the Nikkei 225 index rallied by 1.9%, while in China the SSE Composite rose by 0.8% and Hong Kong’s Hang Seng rose by 1.1%. The South Korean Kospi index rallied by 1.8%.
In the UK, the blue chipFTSE100 index is also poised to rise when markets open at 8am, with futures up 0.82%.
9:30AM BST: ONS estimates of inflation for different household types
1:30PM BST: Second reading of US GDP
1:30PM BST: US weekly jobless claims