A look at the day ahead in European and global markets from Rae Wee

Investors for a change started the day on Wednesday without headlines on new U.S. tariffs, allowing them to shift their attention to the U.S. inflation report later in the day and possible clues on the outlook for Federal Reserve policy.

Expectations are for a slight slowdown in January's core inflation print to an annual 3.1% and for the headline number to hold steady at 2.9%, although analysts expect progress on reining in inflation will stall later in the year.

Wednesday's will be the last inflation reading before any direct impact from U.S. President Donald Trump's tariff measures, which went into effect this month.

Fed Chair Jerome Powell also begins his second day of testimony before Congress shortly after the January consumer price data is released, allowing for a real-time reaction from the Fed itself.

But expectations are that he will reiterate the central bank's patient approach to future rate cuts, particularly as the extent of Trump's tariff salvos and their impact on the global economy remain largely unknown.

Ahead of the day's developments, European stocks looked set for a positive open, extending their rally after the previous session's record high close.

EUROSTOXX 50 futures were up 0.24%, while DAX futures rose 0.33%.

Despite an uncertain global trade backdrop, the benchmark STOXX index has gained nearly 8% so far this year. Many analysts believe Trump's moves are simply negotiating tactics while investors are focused on corporate earnings.

Pepperstone's head of research, Chris Weston, pointed to tailwinds from solid earnings at European companies and the view that European growth may be close to reaching a trough.

Still, the mood remains fragile and things could turn ugly quickly, with worries over deepening trade tensions still looming large in investors' minds.

Major U.S. trading partners have condemned Trump's latest tariffs on steel and aluminium imports, while European Commission President Ursula von der Leyen vowed "firm and proportionate countermeasures" in response to the move.

Mexico's government and Canadian Prime Minister Justin Trudeau similarly expressed their discontent.

In Japan, Industry Minister Yoji Muto said on Wednesday that the government had requested an exemption from the U.S. steel and aluminium tariffs.

Gold's relentless rise to successive record highs hit a speed bump on Wednesday as the yellow metal pulled back, although the $3,000 an ounce level is still within sight.

Fear over the inflationary impact of a global trade war isn't the only reason bullion is up 10% this year, but it's a big one.

Central banks have been big buyers for months, along with investors seeking safety. Worries about U.S. tariffs on gold have also set off a scramble to get the stuff out of London vaults and across the Atlantic.

Key developments that could influence markets on Wednesday:

- U.S. inflation report (January)

- Powell's testimony

- Heineken NV earnings release

- CVS Health earnings release

(Reporting by Rae Wee; Editing by Edmund Klamann)