Trump's Liberation Day tariffs blocked, but for how long?

EU mid-market update: Trump's Liberation Day tariffs blocked, but for how long? Nvidia soars, but notes US should be worried about China AI rise.

Notes/observations

- Stocks rocketed higher after US Court of International Trade blocked Trump’s ‘Liberation Day’ tariffs, declaring them illegal as they do not constitute ‘unusual or extraordinary threat’. Most tariffs have been paused if they fall under International Emergency Economic Powers Act (IEEPA) but those imposed under Section 232 of the Trade Expansion Act of 1962 were not affected by this ruling; Trump Admin already filed appeal.

- The immediately effective nationwide injunction halts collections, mandates refunds for duties paid, and gives the executive branch 10 days to complete the bureaucratic process of stopping enforcement.

- While there are alternative statutory tools like Sections 232, 301, or 122 could offer legal workarounds, they are slower, more limited, or untested—exposing Trump’s trade strategy to further legal and political resistance. The ruling not only weakens U.S. leverage in trade talks but also ignites a broader reckoning over executive tariff powers, with markets rattled and allies unsure of what comes next.

- Semiconductors gave upside tailwinds after Nvidia Q1 results beat expectations on top and bottom line; Q2 guidance was wide but includes $8.0B hit for H20 revenue from export controls. Data Center and Gaming revenue impressed.

- During earnings call, CEO Huang warned that U.S. export controls are accelerating China’s AI self-sufficiency, risking America’s global tech leadership as Chinese platforms like DeepSeek rapidly gain traction. He emphasized that the AI race hinges on controlling the full tech stack — not just chips — and cautioned that current U.S. policy may alienate developers and cede long-term dominance to rivals.

- Partial market holiday for Europe with Switzerland, Norway, Iceland, Finland, Sweden and Denmark closed for Ascension Day.

- Important US data at 08:30 ET, the second reading of US Q1 GDP.

- Asia closed higher with KOSPI underperforming +1.9%. EU indices -0.1% to +0.7%. US futures +1.1-1.9%. Gold -0.3%, DXY +0.1%; Commodity: Brent +1.1%, WTI +1.2%; Crypto: BTC -0.4%, ETH +3.5%.

Asia

-Bank of Korea (BOK) cuts 7-day Repo Rate by 25bps to 2.50%; As expected.

-Bank of Korea (BOK) Official: Monitoring US court ruling on Trump reciprocal tariffs for domestic impact.

-China Commerce Ministry (MOFCOM): Reiterates US to stop 'wrongdoing' on tariffs; US and China maintained communications since Geneva meeting; China talked to US over chip export control recently.

-China Foreign Ministry: US push to revoke Chinese student visas is unreasonable; We have lodged complaint with US.

-China Defense Ministry Spokesperson: Military is open to communication with US.

-China pulls back support as Yuan rebounds against the USD; notes rising expectations that the CNY will strengthen - Caixin.

-Japan Fin Min Kato: Super long term yields have risen 'sharply' - financial press.

-Japan said to be considering sharing the cost of US military hosting costs - Japanese press.

-Hong Kong Financial Sec Chan: US Federal Court ruling against US President Trump tariff measures would at least 'bring Trump to reason'.

-South Koreans reported to be turning out in record numbers for early voting in key Presidential election next week (Tue, Jun 3rd) - financial press.

-Former China Vice Fin Min Zhu Guangyao said the earlier move by China to 'hit back' at US tariffs was aimed to protect not only Chinese interests, but also the global trade system - US financial press.

Europe

-UK is seeking to "accelerate" implementation of trade deal with the US - FT.

-UK Govt Official: US court ruling on Trump tariffs is a matter for US to determine domestically and we note this is only first stage of legal proceedings.

-ECB's Kazimir (Slovakia) found guilty of bribery by Slovakian Court and fined €200K.

-WEF and Davos founder Klaus Schwab launches criminal complaint against his accusers - FT.

Americas

-Pres Trump files appeal (as expected) against US Court of International Trade's blocking of "Liberation Day" tariffs and imposing of a nationwide injunction on the tariffs - US press.

-Sec of State Rubio: US will start to revoke visas of Chinese students, includes those studying in 'critical fields' - post on X.

-Elon Musk confirms "my scheduled time as special govt staff comes to an end; DOGE mission will only strengthen over time" - post on X.

-Japan PM Ishiba said to have a call with US Pres Trump tonight (May 29th's evening) - press.

Trade

-Japan Economic Revitalization Min and Top Trade Negotiator Akazawa: Our basic position is to strongly request review of tariff policy (referring to the US); Leaving for US for more trade talks; To discuss toward an agreement that benefits both.

-US (Manhattan-based) Court of International Trade has blocked and declared illegal Pres Trump's "Liberation Day" tariffs made under the IEEPA and imposed a nationwide injunction - US press.

-US to pause exports of jet engine technology and chip software to China; Also includes certain chemicals, in response to China’s mineral restrictions - NYT.

Tensions/conflict

-Russia Foreign Ministry: Russia, as part of its peace proposals, wants legally binding mechanisms to guarantee that the Ukraine conflict will not resume.

Energy

-Kazakhstan Minister: We can't cut oil production; To pump >96M tons this year.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.28% at 550.46, FTSE -0.08% at 8,718.77, DAX +0.37% at 24,156.00, CAC-40 +0.60% at 7,834.71, IBEX-35 +0.19% at 14,138.39, FTSE MIB +0.36% at 40,272.00, SMI closed, S&P 500 Futures +1.49%].

Market focal points/key themes: European indices opened higher across the board; Scandinavian, Swiss bourses closed for holiday; market sentiment seen tracking positive following trade ruling in the US; sectors leading to the upside include technology and consumer discretionary; among sectors still stuck in the red are real estate utilities; earnings expected in the upcoming US session include Best Buy, Costco, Dell and Foot Locker.

Equities

- Consumer discretionary: LVMH [MC.FR] +1.5% (positively impacted by US court blocking Liberation Day tariffs), Adidas [ADS.DE] +3.0%, Puma [PUM.DE] +3.0% (positively impacted by US court blocking Liberation Day tariffs), Auto Trader [AUTO.UK] -13.0% (earnings), Hollywood Bowl [BOWL.UK] -9.0% (earnings), Watkin Jones [WJG.UK] -10.0% (earnings).

- Energy: TotalEnergies [TTE.FR] +1.0% (divests its non-operated interest in Bonga Field for $510M).

- Industrials: Stellantis [STLA.NL] +2.5% (positively impacted by US court blocking Liberation Day tariffs).

- Technology: ASML [ASML.NL] +3.5%, Infineon [IFX.DE] +3.5% (Nvidia earnings; positively impacted by US court blocking Liberation Day tariffs).

Speakers

-Japan Economic Revitalization Min and Top Trade Negotiator Akazawa: Leaving for US for more trade talks; To discuss toward an agreement that benefits both.

-Japan Fin Min Kato: Super long term yields have risen 'sharply' - financial press.

-Japan PM Ishiba: Sees good signs in the economy following wage hikes; Reiterates will continue to seek lifting of US tariffs - financial press.

-Bank of Korea (BOK) Gov Rhee: Today's rate decision was unanimous; Sees bigger room for further rate cuts given downside risks to growth - post-rate decision press conference.

-Japan Chief Cabinet Sec Hayashi: Declines comment on how tariff ruling may impact talks with the US; Notified by Cambodia authorities 'many' Japan nationals have been detained in Cambodia.

-RBNZ Acting Gov Hawkesby: Seeing weaker demand and weaker inflation pressure than in Feb; Modest revisions to OCR forecast reflect this weakness - Parliamentary testimony.

Economic data

-(IT) Italy May Consumer Confidence: 96.5 v 93.0e; Manufacturing Confidence: 86.5 v 86.2e; Economic Sentiment: 93.1 v 91.5 prior.

-(TR) Turkey Apr Trade Balance: -$12.1B v -$12.0Be.

-(ES) Spain Apr Adjusted Retail Sales Y/Y: 4.0% v 3.6% prior; Retail Sales NSA (unadj) Y/Y: 3.6% v 3.7% prior.

-(HU) Hungary Apr Trade Balance: €1.4B v €1.5Be.

-(JP) Japan May Consumer Confidence: 32.8 v 31.8e.

Fixed income issuance

- UK DMO sells £1.25B in 0.125% 2031 Inflation-linked Gilts (UKTi); Real Yield: 0.827% v 0.007% prior; Bid-to-cover: 2.57x v 2.56x prior.

- Italy Debt Agency (Tesoro) sells total €6.5B vs. €6.5B indicated range in 5-year and 10-year BTP bonds.

- Italy Debt Agency (Tesoro) sells €3.5B vs. €3.5B indicated range in 2034 Floating Rate Notes (CCTeu); Real Yield: 3.28%; bid-to-cover: 1.52x.

Looking ahead

- 05:30 (HU) Hungary Debt Agency (AKK) to sell HUF40B in 2028, 2030 and 2035 bonds.

- 05:30 (ZA) South Africa Apr PPI M/M: 0.0%e v 0.6% prior; Y/Y: 0.0%e v 0.5% prior.

- 06:00 (CZ) Czech Republic to sell 9-month Bills.

- 06:00 (RO) Romania to sell 6.85% July 2030 bonds.

- 06:00 (VN) Vietnam Finance Ministry announcement on upcoming bond issuance (held on Wed).

- 06:00 (IT) Italy Mar Industrial Sales M/M: No est v -0.4% prior; Y/Y: No est v -1.5% prior.

- 07:00 (BR) Brazil May FGV Inflation IGPM M/M: -0.4%e v 0.2% prior; Y/Y: 7.2%e v 8.5% prior.

- 07:30 (BR) Brazil Apr Total Outstanding Loans: No est v 6.484T prior; Outstanding Loans M/M: No est v 0.6% prior; Personal Loan Default Rate: No est v 5.6% prior; National Unemployment Rate: 6.9%e v 7.0% prior.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:30 (US) Q1 GDP Annualized Q/Q (2nd of 3 readings): -0.3%e v -0.3% advance; Personal Consumption: 1.7%e v 1.8% advance.

- 08:30 (US) Q1 GDP Price Index (2nd of 3 readings): 3.7%e v 3.7% advance; Core PCE Price Index Q/Q: 3.5%e v 3.5% advance.

- 08:30 (US) Initial Jobless Claims: 230Ke v 227K prior; Continuing Claims: 1.892Me v 1.903M prior.

- 08:30 (CA) Canada Q1 Current Account Balance: -$3.2Be v -$5.0B prior.

- 08:30 (US) Weekly USDA Net Export Sales.

- 09:00 (RU) Russia Gold and Forex Reserve w/e May 23rd: No est v $667.5B prior.

- 09:00 (CL) Chile Apr Unemployment Rate: 8.6%e v 8.7% prior.

- 09:00 (ZA) South Africa Central Bank (SARB) Interest Rate Decision: Expected to cut Interest Rates by 25bps to 7.25%.

- 10:00 (US) Apr Pending Home Sales M/M: -1.0%e v 6.1% prior; Y/Y: +2.6%e v -0.1% prior.

- 10:30 (US) Weekly EIA Natural Gas Inventories.

- 10:40 (US) Fed's Goolsbee participates in moderated Q&A.

- 11:00 (MX) Mexico Central Bank (Banxico) May Minutes.

- 11:30 (US) Treasury to sell 4-Week and 8-Week Bills.

- 12:00 (US) Weekly DOE Oil Inventories.

- 13:00 (US) Treasury to sell 7-year notes.

- 14:00 (US) Fed's Kugler.

- 15:00 (UK) BOE Gov Bailey.

- 16:00 (US) Fed's Daly.

- 18:00 (NZ) New Zealand May ANZ Consumer Confidence: No est v 98.3 prior.

- 18:45 (NZ) New Zealand Apr Building Permits M/M: No est v 9.6% prior.

- 19:00 (KR) South Korea Apr Industrial Production M/M: 0.5%e v 2.9% prior; Y/Y: 4.0% v 5.3% prior; Cyclical Leading Index Change: No est v 0.2 prior.

- 19:01 (UK) May Lloyds Business Barometer: No est v 39 prior.

- 19:30 (JP) Japan Apr Jobless Rate: 2.5%e v 2.5% prior; Job-To-Applicant Ratio: 1.26e v 1.26 prior.

- 19:30 (JP) Japan May Tokyo CPI Y/Y: 3.4%e v 3.5% prior; CPI Ex-Fresh Food Y/Y: 3.5%e v 3.4% prior; CPI Ex-Fresh Food, Energy Y/Y: 3.2%e v 3.1% prior.

- 19:50 (JP) Japan Apr Preliminary Industrial Production M/M: -1.4%e v 0.2% prior; Y/Y: 0.1%e v 1.0% prior.

- 19:50 (JP) Japan Apr Retail Sales M/M: 0.5%e v -1.2% prior; Y/Y: 3.0%e v 3.1% prior; Dept. Store, Supermarket Sales Y/Y: No est v 1.7% prior.

- 21:00 (PH) Philippines Apr Trade Balance: -$4.2Be v -$4.1B prior; Exports Y/Y: +1.1%e v 5.9% prior; Imports Y/Y: -4.8%e v 11.9% prior.

- 21:30 (AU) Australia Apr Building Approvals M/M: 3.0%e v -8.8% prior; Private Sector Houses M/M: No est v -4.5% prior; Retail Sales M/M: 0.3%e v 0.3% prior; Private Sector Credit M/M: 0.5%e v 0.5% prior; Y/Y: No est v 6.5% prior.

- 22:00 (SG) Singapore Apr M2 Money Supply Y/Y: No est v 5.9% prior; M1 Money Supply Y/Y: No est v 9.2% prior.

- 13:00 (US) Treasury to sell 7-year notes.

- 23:30 (JP) Japan to sell 3-Month bills.

- 23:30 (JP) Japan to sell 2-year JGB bonds.