FOMC meeting minutes in focus

US stocks edged higher on Wednesday following the release of the latest FOMC meeting minutes, as investors evaluated the potential impact of new tariffs. Both the S&P 500 and Nasdaq gained 0.30%, reaching record closing levels, while the Dow turned positive after earlier losses. The minutes revealed a readiness to keep interest rates steady for an extended period due to persistent inflation and uncertainties in US economic policy. However, equities found support from comments suggesting it may be appropriate to pause the balance sheet runoff amid concerns over the debt ceiling. Meanwhile, President Donald Trump proposed 25% tariffs on automobiles, semiconductors, and pharmaceutical products, but the muted market reaction suggested investors had become desensitised to repeated tariff threats with limited enforcement.

European stocks experienced a sharp decline on Wednesday, retreating from record highs reached the day before. The drop was driven by disappointing corporate earnings and concerns over potential trade barriers, as investors also evaluated the possibility of increased issuance of joint European bonds. The Eurozone’s STOXX 600 dropped 1.40% to finish at 5 458 points, while the broader pan-European STOXX 600 fell 1% to close at 552.

Asian markets displayed mixed performance on Wednesday, reflecting the volatility of Wall Street trading and declines in European markets. Investor confidence remained subdued due to concerns over US President Donald Trump’s proposed tariffs and cautious signals from Federal Reserve policymakers. Amid this uncertainty, Chinese stocks bucked the trend, with the Shanghai Composite rising 0.81% to close at 3 352 points and the Shenzhen Component climbing 1.46% to end at 10 772. This rebound, following losses in the previous session, was fuelled by renewed optimism after President Xi Jinping's rare meeting with business leaders, which many viewed as a potential shift toward easing the years-long regulatory crackdown. Meanwhile, the broader risk-off sentiment lifted gold prices to a record high, while safe-haven currencies, particularly the Japanese yen, gained strength amid heightened geopolitical tensions. 

The postponement of South Africa’s budget speech on Wednesday, stemming from disagreements within the ruling coalition over proposed fiscal measures, led to immediate negative market reactions. The FTSE/JSE All Share Index experienced a near 0.20% decline, reflecting investor concerns about political stability and the government's ability to implement fiscal policies. At the same time, the rand depreciated by about 1% against the US dollar, as investors grew uncertain about the country's economic direction. The postponement, the first of its kind in post-apartheid South Africa, heightened concerns over investor confidence, potentially affecting both the stock market and the broader economic outlook. These developments underscored the market's sensitivity to political gridlock and uncertainty around fiscal policy, casting a shadow over South Africa's short-term financial stability.

In commodities, oil prices inched higher, driven by concerns over potential supply disruptions in the US and Russia, while markets remained focused on developments in the Ukraine peace talks. Brent crude futures rose by 0.20% to trade at $75.98 a barrel, positioning for a possible third consecutive day of gains.