European Markets Open Higher Amid Tariff Changes

LONDON — European stock markets began Wednesday positively as a flat 10% tariff took effect instead of U.S. President Donald Trump’s proposed 15% increase, providing some relief to global investors.

The pan-European Stocks 600 index saw a 0.5% rise immediately after the announcement. The UK’s FTSE100 increased by 0.8%, while Germany’s DAX added around 0.3%. France’s CAC40 also experienced a similar uptick.

Wednesday marks another busy day for earnings reports, with companies like Iberdrola, E.ON, Bayer, and Telefonica anticipated to release their figures. Key data, including German GDP, consumer confidence, and euro area inflation stats, are also set to be unveiled.

In early trading, British spirits company Diageo saw its stock drop 6% after revealing a disappointing sales and profit forecast for 2026. The world’s largest spirits maker noted that weak demand from North America and China impacted its revenue during the first quarter of its fiscal year.

According to Diageo, net sales decreased by 4% to $10.5 billion over the six months ending in December, citing that disposable income pressures in the U.S. spirits market affected their performance. Operating income also declined by 1.2% to $3.1 billion.

Looking ahead, Diageo expects an even weaker 2026, forecasting organic sales to drop by 2% to 3%, with organic operating profit remaining virtually unchanged and a dividend reduction to 20 cents per share.

On a more positive note, HSBC reported a better-than-expected annual pre-tax profit of $29.91 billion ahead of the market opening.

European stocks opened on a high note following Tuesday’s gains, as investors digested President Trump’s latest trade policies. During his recent State of the Union address, Trump expressed confidence in his tariffs replacing income taxes in the long run.

He stated, “Over time, I believe that foreign-imposed tariffs, as they were in the past, will effectively replace the modern income tax system, removing a tremendous economic burden from the people I love.”

Meanwhile, U.S. stock futures saw a slight increase on Tuesday night in anticipation of Nvidia’s important earnings report, amid growing cautiousness regarding tech stock valuations and skepticism about expensive AI spending by hyperscalers.

In the Asia-Pacific market, Korean and Japanese stocks reached record highs overnight.