European stock markets opened slightly higher on Wednesday despite a major trade development from the United States. President Donald Trump announced a 50% tariff on imported copper and hinted at tariffs of up to 200% on pharmaceuticals. While Wall Street dipped in response and U.S. copper futures surged to record highs, European markets remained largely unshaken, with London’s FTSE 100 up 0.1% and the STOXX 600 gaining 0.4%.
The global equity market response was muted, with the MSCI World Equity Index rising 0.1%. Meanwhile, the U.S. dollar showed little change, and the euro dipped slightly. In currency markets, the dollar strengthened against the yen, highlighting Japan’s lagging progress in trade talks with Washington compared to other major partners.
Copper futures jumped by over 10%, driven by fears of constrained supply due to the new tariffs. The metal, crucial for sectors like EVs, defense, and infrastructure, is now at the center of growing trade tensions. Trump has warned 14 countries of looming tariff hikes by August 1, and a decision on European Union tariffs is expected soon, with reports suggesting the EU may face steeper levies than the UK.
Market participants remain on edge over the long-term economic implications. Amelie Derambure of Amundi noted the unpredictability of tariff effects on inflation and corporate margins. While equity markets appear to anticipate manageable fallout, bond markets are showing signs of concern, as evidenced by rising U.S. Treasury yields and lackluster demand at a recent three-year bond auction.
Other asset classes reacted cautiously. Gold prices continued their slide for a third day, while oil edged slightly higher. Investors are now looking to the upcoming release of the U.S. Federal Reserve’s meeting minutes for further insight into potential policy responses amid growing global trade uncertainty.
Source: Reuters