The US Court of International Trade ruled Trump’s tariffs illegal. The Bank of Mexico will extend its cycle of rate cuts

At the end of Wednesday, the Dow Jones Index (US30) fell by 0.56%. The S&P 500 Index (US500) fell by 0.58%. The Nasdaq technology Index (US100) closed down 0.51%. Stocks fell amid President Trump’s expansion of restrictions on chip software supplies to China.

According to the Fed, the announced tariff increase was much more significant and extensive than expected, and they noted considerable uncertainty regarding the direction of trade policy, as well as the magnitude, scale, timing, and duration of its economic consequences, according to the minutes of the May FOMC meeting. Policymakers viewed this uncertainty as unusually high and believed that the risks of a decline in employment and economic activity, as well as the risks of higher inflation, had increased. In May 2025, the Federal Reserve kept its benchmark interest rate at 4.25-4.50% for the third consecutive meeting, in line with expectations.

The US Court of International Trade ruled that the tariffs were illegal and ordered them to be repealed and permanently blocked, dealing a significant blow to the president’s economic agenda. The White House is expected to appeal the decision.

Nvidia reported better-than-expected first-quarter results on Wednesday, but the chipmaker warned of an $8 billion negative impact on its second-quarter expectations due to the US ban on chip sales to China. Nvidia (NVDA) shares rose more than 2% after the close of trading on the back of the report.

The Mexican peso (MXN) fell to 19.4 per US dollar from an eight-month high of 19.2 reached on May 23, under pressure from some strengthening of the dollar and the Bank of Mexico’s dovish expectations. At the same time, expectations that the Bank of Mexico will extend its cycle of rate cuts this year prevailed after the latest core inflation figures matched expectations. The Bank of Mexico has made three consecutive 50 bps rate cuts in the current cycle, lowering its benchmark rate to 8.5%.

European stock markets were mostly lower on Wednesday. Germany’s DAX (DE40) fell by 0.78%, France’s CAC 40 (FR40) closed down 0.49%, and Spain’s IBEX35 (ES35) lost 0. 98%, and the British FTSE 100 (UK100) closed down 0.59%. Median inflation expectations in the Eurozone rose for the second month in a row to 3.1% in April 2025, the highest since February 2024, compared to 2.9% in March. Uncertainty about inflation expectations for the next 12 months also increased, reaching the same level as in June 2024. At the same time, inflation expectations for the next three years remained unchanged at 2.5%.

WTI crude oil futures rose to around $62.6 per barrel, marking the second consecutive session of growth, helped by lower tariff risks and prospects for reduced supply. On Wednesday, the US Court of International Trade ruled that President Trump had exceeded his authority in imposing global tariffs, declaring them illegal and ordering them to be rescinded. Although the administration is expected to appeal, the ruling helped reduce trade uncertainty and improved the outlook for global oil demand.

The US natural gas prices rose to $3.40/MMBtu, the highest level in a week, thanks to lower production, rising demand, and expectations for hotter weather. Looking ahead, LNG supplies are expected to remain below April’s peak.

Asian markets were mostly down yesterday. Japan’s Nikkei 225 (JP225) fell by 0.01%, China’s FTSE China A50 (CHA50) dropped 0.03%, Hong Kong’s Hang Seng (HK50) lost 0. 53%, and Australia’s ASX 200 (AU200) showed a negative result of 0.13%. Hong Kong stocks rose to 23,360 at the start of trading on Thursday, recovering from the previous session’s decline. The growth was almost universal, led by technology, consumer, and financial companies. Sentiment improved after a strong rally in US futures after a federal court blocked President Donald Trump’s tariffs imposed on “Liberation Day”.

New Zealand’s ANZ Business Outlook Index fell sharply to 36.6 in May 2025 from 49.3 the previous month, reaching its lowest level since July 2024. The decline is the third consecutive month amid growing concerns about the impact of rising US tariffs.