Global stocks hovered near record highs on Wednesday as traders showed limited concern over President Donald Trump's recent pronouncements on tariffs for auto, semiconductor, and pharmaceutical imports.
Since taking office four weeks ago, Trump has introduced a 10% tariff on all Chinese imports, added onto existing levies. Additionally, he has declared a 25% tariff on goods from Mexico (now delayed for a month) and on non-energy imports from Canada.
Trump stated on Tuesday that tariffs on pharmaceuticals and semiconductor chips would commence at "25% or higher", escalating significantly within a year. He aims to impose like tariffs on autos by April 2.
European stocks remained fairly steady, with gains in drugmakers and miners countering a general decline in UK equities following a rise in British inflation. While the STOXX 600 held flat, the FTSE 100 dropped 0.1%.
Investor response to Trump's threats has been muted, viewing them more as negotiation tools.
According to economist Samy Chaar from Lombard Odier, “The global economy and financial markets are not solely impacted by tariffs. They are also influenced by activity, corporate profitability, and interest rates.” He emphasized, "Tariffs may affect these elements, but it seemed contained so far."
Minutes from the U.S. Fed’s January meeting, where borrowing costs were maintained at 4.25% to 4.5%, are expected later on Wednesday. The dollar held steady around two-month lows against a basket of currencies.
European leaders have pledged increased support for Ukraine amid U.S.-Russia tensions. Investors anticipate this may lead to economic stimulus.
European arms manufacturers have seen record high stock prices on the anticipation of increased defense spending. German 30-year bond yields have risen by about 20 basis points over the past two weeks, and U.S. 30-year Treasuries yields by roughly 17 bps.
Overnight, the S&P 500 edged past previous levels, with futures on the S&P 500 and Nasdaq up 0.15%.
In Asia, investors took profits from recent gains in Chinese tech stocks driven by AI startup DeepSeek.
Thomas Rupf, from VP Bank, noted, "Green shoots are emerging in China’s economy, and DeepSeek is injecting a shot of adrenaline into the sector."
The Hang Seng Index in Hong Kong slipped by 0.4%, yet remains up 14% in 2025, vying with Germany's DAX index as the top-performing market globally.
Amid currency movements, the New Zealand dollar strengthened by 0.3% after an expected 50 basis point interest rate cut. Sterling saw a slight increase following a rise in UK inflation.
Gold defied the stronger dollar, climbing 0.3% to $2,944 an ounce, staying near its previous week's highs.