LONDON — European stocks ended higher on Wednesday as global market nerves eased after U.S. President Donald Trump's universal 10% tariff came into effect rather than the threatened higher 15% rate.
The pan-European Stoxx 600 closed 0.7% higher with most major bourses finishing the day in positive territory.
It was another busy day of earnings on Wednesday with Leonardo, Iberdrola, E.ON, Bayer, Ferrovial, Heidelberg Materials, Poste Italiane, Fresenius, Novonesis and Telefonica. Data releases included German gross domestic product and consumer confidence and the latest euro zone inflation figures.
British spirits company Diageo finished the session down 12.7% after lowering its 2026 sales and profit outlook on Wednesday. The world's biggest spirits maker reported that weaker demand from North America and China had affected earnings in its fiscal first half.
Net sales declined by 4% to $10.5 billion in the six months to December, as the company cited "pressure on disposable income impacting US Spirits." Operating profit was also 1.2% lower at $3.1 billion.
Diageo is now expecting further weakness in 2026, with organic sales projected to be 2% to 3% lower, organic operating profit to be flat to up low single digits, and cut dividends to 20 cents per share.
Additionally, British carmaker Aston Martin will slash 20% of its workforce in 2026 after reporting weaker earnings due to the impact of tariffs in the U.S. and China, it said Wednesday.
The company said the cuts would amount to £40 million in savings. The luxury automaker's revenue dropped to £1.26 billion in 2025, down 21% from the prior year. It posted an operating loss of £259.2 million, and total wholesale volumes declined 10% to 5,448.
Heightened tariffs in the U.S. and China weighed on the company's performance and ability to execute its plans effectively, said Aston Martin's CEO Adrian Hallmark. The stock ended the session down 2.9%, touching a 52-week low.
HSBC reported earnings ahead of the opening bell, with the bank reporting an annual pre-tax profit of $29.91 billion, beating estimates. London-listed shares in HSBC ended Wednesday's session almost 8% higher, reaching a new 52-week high.
The positive showing for European stocks comes after regional bourses closed higher Tuesday as investors assessed the new global trading landscape after Trump's latest tariff move. In his State of the Union speech Tuesday night, Trump said he believed his tariffs would replace income tax.
"As time goes by, I believe that tariffs, paid for by foreign countries, will, like in the past, substantially replace the modern-day system of income tax, taking a great financial burden off the people that I love," the president said.
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In the U.S., stocks traded higher on Wednesday, with the S&P 500 last seen up about 0.7%, ahead of a key earnings report from Nvidia, which comes at a time when investors are recalibrating lofty tech stock valuations and are increasingly skeptical on hyperscalers' high AI capital expenditures.
In Asia-Pacific markets, South Korea and Japan stocks hit record highs overnight.
— CNBC's Garrett Downs contributed to this market report.