Stocks have risen and US Treasury yields firmed as investors assessed the latest US tariff salvo along with Federal Reserve Chair Jerome Powell’s signal of a patient path for rate cuts.

Financial markets were largely biding time ahead of a reading on US consumer prices due later in the day which could guide the outlook for monetary policy there, particularly as policymakers weigh the potential inflationary impact of Donald Trump’s tariffs on the economy.

The US President on Monday raised tariffs on steel and aluminium imports to 25 per cent from the previous 10 per cent, eliminated country exceptions, as well as product-specific exclusions, and promised to announce global reciprocal tariffs within days.

But Trump also said he was considering an exemption for Australia and that the steel and aluminium measures would only take effect from March 4, keeping alive the possibility that the duties are being used as a negotiating tool.

Mexico, Canada and the European Union on Tuesday condemned the move, with the EU saying the 27-nation bloc would take “firm and proportionate countermeasures”.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.32 per cent, following a mixed session on Wall Street as gains in Coca-Cola and Apple offset losses in Tesla.

Early on Wednesday, EUROSTOXX 50 futures were up 0.2 per cent while FTSE futures eased 0.05 per cent.

Nasdaq futures ticked 0.08 per cent higher. S&P 500 futures shed 0.02 per cent.

“Overall, Powell’s steady tone, cautious Asian equity performance, and the anticipation of US CPI data underscore a market environment focused on inflation risks and policy clarity,” said Shier Lee Lim, lead FX and macro strategist for APAC at Convera.

“Tariff developments, while notable, have yet to significantly shift sentiment, as markets remain anchored by central bank guidance and macroeconomic data.”

Elsewhere, China’s CSI300 blue-chip index fell 0.29 per cent, while the Shanghai Composite Index slipped 0.16 per cent.

Hong Kong’s Hang Seng Index advanced 0.7 per cent. Hong Kong-listed shares of Alibaba surged more than 5 per cent after a media report that it is partnering with Apple to roll out artificial intelligence features for iPhone users in China.

Japan’s Nikkei rose 0.25 per cent, ahead of SoftBank Group’s results due later in the day.

Treasury yields maintained gains after Powell’s testimony as investor attention turns to the latest reading of consumer prices on Wednesday.

The yield on benchmark US 10-year notes held near a one-week high at 4.5332 per cent, while the two-year yield steadied at 4.2917 per cent.

Markets have been slowly scaling back expectations for Fed rate cuts this year, largely expecting the US central bank to hold rates steady at its March and May meetings.

Powell on Tuesday said “We are in a pretty good place with this economy”, noting that the Fed was in no hurry to make any further interest rate cuts, but stood ready to do so if inflation declines further or the job market weakens.

In currencies, the dollar’s tariff-driven rally hit pause on Wednesday, as it slipped modestly against most of its major peers save for the yen.

Against the greenback, the euro ticked up 0.02 per cent to $1.0363, while sterling edged 0.04 per cent higher to $1.2451.

The Aussie dollar rose 0.06 per cent to $0.6299.

“We’ve seen a lot of volatility come off of tariff headlines in the last two weeks,” said Helen Given, FX trader at Monex USA in Washington.

“But what we’re seeing now is that those headlines and those announcements are not necessarily an indication that these tariffs are actually going to be levied, at least not at the time that we think that they might be.”

Meanwhile, the yen fell more than 0.5 per cent to 153.35 per dollar. Bank of Japan Governor Kazuo Ueda said on Wednesday the central bank will continue to conduct its monetary policy with the aim of achieving its 2 per cent inflation target sustainably and stably.

Oil prices retreated from their recent peaks hit on the back of Russian and Iranian supply concerns, with Brent crude falling 0.36% to $76.72 per barrel. US crude similarly slid 0.41 per cent to $73.02 a barrel.

Spot gold held near a record high at $2,894 an ounce.

This post was originally published on Michael West.