Bank shares rise after US court ruling on Trump's trade tariffs

Daily Mail​

4 days ago

Shares in major banks and finance firms rose on Thursday after a US court ruling on Donald Trump's trade tariffs.
A US federal court has blocked Trump's sweeping tariffs, in a major blow to a key component of his economic policies.
The Court of International Trade ruled that an emergency law invoked by the White House did not give the president unilateral authority to impose tariffs on nearly every country.
Minutes after the ruling, the Trump administration said it would lodge an appeal.
On Thursday, Barclays shares were up 1.27 per cent or 4.10p to 328.05p, while HSBC shares rose 1.46 per cent or 12.60p to 878.00p, having climbed 28 per cent in the last year.
Prudential shares were up 1.66 per cent or 13.80p to 847.00p, while Standard Chartered shares increased 2.68 per cent or 30.50p to 1,170.50p.
Lloyds Banking Group shares rose 1.04 per cent or 0.80p to 77.42p, having risen over 40 per cent in the last year.
Richard Hunter, head of markets at Interactive Investor, told This is Money: 'It remains to be seen whether the ruling will hold water after the inevitable challenge to come from the White House.
'Even so, the unanimous ruling sets the scene for a potential tariff reversal.
'If so, and the global economy were to reset to pre-Trump levels, this would particularly benefit those companies with an exposure to China, Standard Chartered and indeed Prudential are among the biggest FTSE 100 risers today, and even those with a US interest like Barclays since the possibility of recession would recede.
'Lloyds and NatWest are also rallying although less strongly, with the UK being less of a tariff target but with a UK/US trade deal already penned.'
Barclays, HSBC and Standard Chartered suffered sizeable share price losses during the fallout following the announcement of Trump's various levies.
HSBC, Barclays and Standard Chartered each have exposure to the geopolitical climate and suffered share price downturns during the fallout of Trump's levies.
HSBC is one of the largest international banks in Asia, while Standard Chartered's focus heavily on emerging markets across Asia, Africa and the Middle East. In April, Standard Chartered's shares fell 7 per cent, while HSBC and Barclays shares fell 5 per cent and 4 per cent respectively.
Meanwhile, banks like Barclays can be affected by geopolitical movements due to its large investment bank operations.
Trump's retreat on his trade offensive has helped fuel a recovery for London markets but his focus on tariffs on Asian goods and services remains a sticking point for certain banks.
The British and US trade deal was put in place to reduce the impact of the tariffs the US president had imposed. It remain unclear how last night's ruling could affect the deal.
Scott Gallacher, a director at Rowley Turton, told Newspage: 'The court's ruling to block and unwind Trump's tariffs will hopefully undo much of the damage his trade war did to markets and investment values.
'Expect a relief rally in emerging markets, global industrials, and commodities — the very sectors that suffered during the tariff era.
'Meanwhile, safe havens like gold and Treasuries could retreat, and previously protected US industries may feel the squeeze. In short: the Trump trade war trade is unwinding — fast.'
Russ Mould, investment director at AJ Bell, said: 'For the court to determine that President Trump didn't have the authority to impose the 'Liberation Day' tariffs is a pretty seismic development.
'That the gains were measured rather than blockbuster reflects a healthy level of scepticism over whether this can truly rein in the Trump administration, which has already launched an appeal against the judgement.'
He added: 'The problem for investors is it could prolong uncertainty even if, ultimately, it results in a better outcome from a market perspective.
'It also exacerbates the issue of how the big tax cuts being brought forward in the US will be funded – given revenue from tariffs was supposed to help on this front.
'The first thing to watch is whether or not the administration's appeal against the decision is successful.
'The news has given global financial markets an undoubted lift though, with strong results and a bullish outlook from AI chipmaker Nvidia also positive for sentiment.
'In London, stocks and investment trusts with exposure to the US moved higher. The bond market though continues to flash a warning signal with yields on sovereign debt moving higher amid a weak auction for 40-year Japanese government debt at the start of this week.'