Markets and data show the U.S. economy is slowing.

Stocks in Japan, Australia and South Korea fell at the open on Friday.

Equity futures for the S&P 500 Index pared most of their early gains after an appeals court allowed tariffs to remain in place for now. The dollar was steady in early trading after a gauge of currency strength fell 0.4%.

The yen gained against the dollar after inflation in Tokyo rose by the most in two years.

A federal appeals court offered Trump a temporary reprieve from a ruling that threatened to throw out much of his tariff agenda. Adding to concerns, the U.S. economy shrank at the start of the year, held back by weaker consumer spending and a bigger hit from trade than previously reported. "Whatever happens, markets are realizing that we are facing a prolonged period of uncertainty," said Win Thin, chief global market strategist at Brown Brothers Harriman & Co.

"Leaving tariffs in place increases the risk of stagflation and is negative for the dollar and equities." The administration celebrated the order from the U.S. Court of Appeals for the Federal Circuit as validation of its vow to aggressively challenge a ruling issued late Wednesday by the Court of International Trade blocking most of Trump's tariffs over the use of the International Emergency Economic Powers Act, or IEEPA. White House officials have said they plan to continue to defend the legality of their trade efforts in the U.S. Supreme Court, and have said that if they are blocked, Trump will pursue similar levies through other authorities.

"The first thought that comes to mind when dissecting the rapidly evolving news flow around the tariff story is that confusion in the markets and in the business community must have reached a new extreme," Chris Weston, head of research at Pepperstone Group, wrote in a note. Meanwhile, prices in Tokyo jumped the most in two years, in a worrying sign for Prime Minister Shigeru Ishiba ahead of a summer election. High inflation and strong wage growth mean the Bank of Japan is likely to raise interest rates in July and December, Kristina Clifton, a senior economist and strategist at Commonwealth Bank of Australia, wrote in a note to clients.

"For the BOJ, however, the risks are tilted toward a smaller hike given the uncertain global backdrop and the negative impact of U.S. tariffs on the Japanese economy," Clifton wrote. Government bonds rose on Thursday as traders raised expectations for a Federal Reserve interest rate cut following weak economic data. Recurring applications for U.S. unemployment benefits jumped to their highest since November 2021, a possible sign of a rise in the jobless rate this month.

U.S. pending home sales fell the most in 2022 on higher borrowing costs.

Trump urged Fed Chairman Jerome Powell to cut interest rates in a White House meeting, saying he made a mistake by not cutting borrowing costs.

In corporate news, Dell Technologies Inc. gave a profit outlook for the year that beat estimates and said it had seen a significant increase in orders for servers to run AI networks. Salesforce Inc. reported signs of traction in its new AI products, but that was not enough to ease investor concerns about a long trend of slowing revenue growth.

S&P 500 futures fell 0.2% as of 9:21 a.m. Tokyo time

Hang Seng futures fell 0.7%

Japan's Topix fell 1%

Australia's S&P/ASX 200 fell 0.2%

Euro Stoxx 50 futures little changed

Currencies

Bloomberg Dollar Spot Index little changed

Euro little changed at $1.1380

Japanese yen rose 0.3% to 143.78 per dollar

Offshore yuan little changed at 7.1867 per dollar

Australian dollar rose 0.1% to $0.6449

Source: Bloomberg