US CPI in Focus as Tariffs Stir Market Uncertainty

Investors are awaiting the latest US inflation data, expected to show a slight slowdown in core CPI to 3.1%, with the headline rate holding at 2.9%. European markets extended gains, with EUROSTOXX 50 futures up 0.24% and DAX futures rising 0.33%, despite concerns over new US tariffs on steel and aluminium. Meanwhile, gold prices briefly retreated after reaching record highs amid central bank demand and fears of an inflationary trade war.

Equities

The FTSE 100 edged up 0.1% on Tuesday, closing at a record high, helped by gains in Shell, which rose 2.4%. The energy giant benefited from ongoing talks with Nigerian oil producers over securing up to 25% of service contracts for the Bonga North deepwater project. 

BP slipped 0.6% after posting its lowest earnings in four years, with CEO Murray Auchincloss pledging a fundamental reset of the company’s strategy. Miners, including Antofagasta, Glencore, and Rio Tinto, fell between 1.2% and 2.7% following fresh US steel and aluminium tariffs, raising concerns over global demand.

Entain dropped 11.1%, making it the biggest loser on the FTSE 100, after CEO Gavin Isaacs stepped down abruptly, with Stella David taking over as interim CEO. TUI slid 10.2%, warning of slowing bookings, while airline stocks also declined, with easyJet down 2.7% and IAG falling 1.7%.

In the US, Wall Street's main indices ended mixed. The S&P 500 added 0.03% to 6,068.50, while the Dow Jones rose 0.28% to 44,593.65. The Nasdaq declined 0.36% to 19,643.86, weighed down by a 6.3% fall in Tesla, following reports that a $97 billion bid, led by Elon Musk, was made to buy the nonprofit that controls OpenAI. 

Coca-Cola climbed 4.7%, beating fourth-quarter revenue estimates thanks to higher prices and resilient demand. Apple rose 2.2% after reports that it was partnering with Alibaba to develop AI features for iPhones in China. 

Phillips 66 gained 4.7% after activist Elliott Investment Management disclosed a $2.5 billion stake in the company. DuPont jumped 7% after raising its 2025 profit forecast due to strong demand for electronics. Ecolab gained 6.2%, projecting higher-than-expected profit for 2025. Fidelity National Information Services dropped 11%, the biggest S&P 500 loser, after forecasting first-quarter profit below expectations.

Federal Reserve Chair Jerome Powell told the Senate Banking Committee that the Fed was in no hurry to cut rates, given the strong economy and inflation still above the 2% target. Investors are watching for January's CPI data, due Wednesday, which could influence rate expectations.

Forex & Commodities

The US dollar retreated ahead of the latest inflation data, with traders watching for signs that could influence Federal Reserve policy. It fell slightly against the euro, trading at $1.0358, while gaining 0.7% against the yen, pushing above its 200-day moving average to 153.56. Sterling hovered at $1.2441 after rising 0.7% the previous day.

Gold pulled back from record highs, trading at $2,894.69 per ounce after touching $2,942.70 on Tuesday. Federal Reserve Chair Jerome Powell reiterated that the Fed was in no hurry to cut interest rates, dampening expectations for a more accommodative policy. Investors are waiting for US consumer price index data, which could shape interest rate forecasts.

Oil prices slipped as reports indicated a rise in US crude stockpiles. Brent crude fell 0.7% to $76.48 per barrel, while West Texas Intermediate dropped 0.5% to $72.78. The decline followed a three-day rally in which Brent gained 3.6% and WTI climbed 3.7%. The American Petroleum Institute reported a 9.4 million barrel increase in US crude inventories last week, while gasoline and distillate stocks declined.