Global stock markets shrugged off initial fears surrounding new tariffs on Monday as 25% levies on steel and aluminum imports took effect late in the night. These levies, which encompass both steel and aluminum finished products, created a wave of uncertainty that was swiftly felt across futures markets. As trading commenced, both the S&P 500 and the Eurostoxx 50 index were poised for a lower opening, reflecting a cautious sentiment gripping financial markets.
Despite the initial turbulence, the global market response remained largely indifferent to the tariffs. However, futures markets experienced a downturn as the levies came into force, indicating a more cautious tone among investors. This caution was further echoed in trading circles with the S&P 500 and Eurostoxx 50 showing signs of a subdued performance for the day.
Adding to the mix of factors impacting the markets, Fed Chair Powell's hawkish remarks overnight rekindled demand for the US dollar. His comments contributed to renewed interest in the currency, despite broader market apprehensions. Meanwhile, the core Consumer Price Index (CPI) is anticipated to remain above the Federal Reserve's target, registering at 3.1% year-over-year. This aligns with expectations as market analysts watch closely for any shifts in inflationary pressures.
In foreign exchange markets, the EUR/USD pair maintained its stability above 1.0350 during European trading hours on Wednesday. This steadiness suggests a degree of resilience amid ongoing market fluctuations. Simultaneously, trade war concerns are anticipated to mitigate any significant downward corrections for the safe-haven XAU/USD pair, providing some level of security for investors seeking refuge.
Market observers also await the Consumer Price Index report, which is expected to indicate an annual increase of 2.9% in January, consistent with the previous month’s figure. This data will be crucial in shaping market expectations around inflation and potential monetary policy adjustments by central banks.