Europe’s stock markets approached record highs on Wednesday, buoyed by investor optimism surrounding artificial intelligence (AI) spending plans under former US President Donald Trump. This enthusiasm offset concerns about potential tariffs on Chinese imports, which tempered gains in Asia.
The Stoxx Europe 600 climbed 0.3%, placing it within striking distance of its all-time peak from September. Meanwhile, US equity futures signalled a continuation of Wall Street’s recent rally, with the S&P 500 and Nasdaq 100 expected to advance. Analysts suggest that a combination of pro-business policies and robust economic momentum is driving global equity sentiment.
AI Investments Drive European and Us Market Optimism
European and US markets have found fresh momentum, supported by renewed interest in artificial intelligence and technology sectors. This surge follows Donald Trump’s proposal for increased investment in AI, which has sparked enthusiasm among investors despite lingering geopolitical uncertainties. Technology and healthcare stocks were among the top gainers on the Stoxx Europe 600, while resource-heavy sectors like mining lagged due to declining commodity prices.
Market participants see this rally as a reflection of investor confidence in long-term growth industries. “I still see the path of least resistance, albeit a choppy one, leading higher on Wall Street,” said Michael Brown, a senior strategist at Pepperstone Group Ltd. Observers note that Trump’s emphasis on economic performance, particularly stock market growth, has likely influenced these developments.
Asian tech stocks also posted gains in anticipation of increased AI funding, though the broader region displayed mixed results. Chinese shares fell as Trump reiterated plans for a 10% tariff on Chinese goods, highlighting ongoing tensions between the two largest global economies.
Mixed Signals as Tariffs Temper China’s Momentum
While the AI-driven rally gained ground in Western markets, its ripple effect was muted in Asia, particularly in China, where shares declined. The surprise downturn came despite a measured approach to US trade policy that spared China from immediate tariff hikes, shifting focus instead to Canada and Mexico.
The possibility of a 10% tariff on Chinese imports has raised concerns about its potential impact on commodity prices and industrial demand. Miners, particularly those reliant on iron ore, underperformed as markets absorbed the implications of weaker trade conditions. Nigel Peh, a portfolio manager at Timefolio Asset Management, suggested profit-taking may also have contributed to the downturn, with investors leveraging the tariff announcements as a reason to exit positions.
Currency markets reflected a similar divergence, with the dollar strengthening against its major counterparts while the Chinese yuan lagged. US Treasury yields remained stable following a recent decline, further signalling cautious sentiment among investors.
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