US Markets Rise as Inflation Cools, Trade Tensions Create Volatility

NEW YORK — Stock markets rose Wednesday on both sides of the Atlantic as investors responded positively to slowing US inflation data and news of a proposed Ukraine ceasefire plan, though trade tensions continue to create market uncertainty.

Wall Street’s main indices showed mixed results after initially jumping at the start of trading. The tech-heavy Nasdaq Composite closed up 1.2 percent and the S&P 500 gained 0.5 percent, while the Dow Jones Industrial Average slipped 0.2 percent by the closing bell.

Inflation Shows Signs of Cooling

Government data released Wednesday showed US consumer inflation had slowed slightly to 2.8 percent in February, which was better than analysts expected. Core inflation, which excludes volatile food and energy prices, dipped to an annual rate of 3.1 percent.

“The inflation data are a bright spot in the Federal Reserve’s battle against rising prices. They reinforce the expectation of three rate cuts later in 2025,” said Jochen Stanzl, chief market analyst at CMC Markets.

“Sentiment on Wall Street is so negative that these positive inflation figures could spark a broader recovery in stock prices,” he added.

The inflation report comes as welcome news for the Federal Reserve, which has been cautious about cutting interest rates too quickly after its aggressive hiking campaign to combat inflation that peaked in 2022.

Trade Tensions Escalate Globally

Global markets have experienced significant volatility this month as President Trump has imposed or threatened tariffs on global trading partners. Most recently, 25 percent tariffs on all US aluminum and steel imports took effect, impacting numerous nations including Brazil, South Korea, and the European Union.

Trump had threatened to double those tariffs on Canada after Ontario imposed an electricity surcharge on three US states, but he called that off after the province halted the charge. The move nonetheless brought swift retaliation from Canada, which announced nearly $21 billion in additional tariffs on US goods.

The European Union said it would target $28 billion in US imports starting in April, while China vowed to strike back. Britain, Brazil, and Mexico have so far held off taking countermeasures.

The on-off nature of Trump’s trade policies has fueled uncertainty in markets and has sent the VIX “fear index” of volatility to its highest level since August.

International Markets React

European markets also showed gains on Wednesday, with Frankfurt stocks jumping 1.6 percent, Paris gaining 0.6 percent, and London adding 0.5 percent. Analysts said support also came from Ukraine endorsing an American proposal for a 30-day ceasefire, with Russia yet to issue a response.

Asian markets ended mostly lower on Wednesday. Tokyo’s Nikkei 225 managed a slight gain of 0.1 percent, while Hong Kong’s Hang Seng Index fell 0.8 percent and Shanghai’s Composite dropped 0.2 percent.

Analysts said high uncertainty in US stock markets made other regions more attractive as investors seek stability.

“Investors are increasingly looking overseas as concerns mount over US stock valuations, monetary policy, and economic uncertainty,” said Charu Chanana, chief investment strategist at Saxo.

Commodities and Currencies

Oil prices rose, with Brent North Sea Crude up 2.0 percent at $70.95 per barrel and West Texas Intermediate up 2.2 percent at $67.68 per barrel.

In currency markets, the euro fell against the dollar to $1.0890 from $1.0915 on Tuesday. The pound rose slightly to $1.2969 from $1.2954, while the dollar strengthened against the Japanese yen, trading at 148.32 yen compared to 147.70 yen.

Sources: AFP, Reuters, and financial market data