The upward momentum is supported by gains in Asia, though several points of concern persist, most notably the ongoing threat to the independence of the Federal Reserve (Fed) following the criminal investigation launched by President Donald Trump's administration against Jerome Powell.
For now, markets appear to interpret the episode as increased pressure to secure rate cuts in an election year, with the expectation that common sense will prevail and no structural changes will be made to the management of monetary policy.
Senior central bankers and Wall Street executives have expressed their support for the Fed's independence, warning that political interference could lead to higher inflation, increased public financing costs, and greater economic volatility.
On the macroeconomic front, the US Consumer Price Index was slightly more benign than expected, though the uptick compared to the previous month reinforced expectations that the Fed will keep rates unchanged in January.
On Wednesday, the Producer Price Index will be released, but the main focus of the day will be the possible Supreme Court ruling on the legality of tariffs imposed by Trump.
"After the hearings in early November, several members of the court expressed skepticism about the interpretation of the law, so the probability that reciprocal tariffs will be invalidated is high, which would lower the average tariff from levels close to 17% to 9%. However, we estimate that these would be replaced by other tariffs to maintain fiscal revenues," analysts at Renta 4 said in their morning report.
The geopolitical front added another layer of uncertainty. Greenland's Prime Minister reiterated that his country prefers to remain part of Denmark rather than become US territory, amid President Trump's push to gain control of the Arctic island.
The foreign ministers of Denmark and Greenland will meet Wednesday with US Vice President J. D. Vance and Secretary of State Marco Rubio.
Meanwhile, the world continued to watch Iran, where protests against the regime have been met with a crackdown resulting in more than 2,500 deaths. US President Donald Trump urged Iranians to continue demonstrating, promising support, while Tehran accused the United States and Israel of fomenting violence and attributed the deaths to "terrorist operatives" with foreign backing.
Elsewhere, Asian markets advanced, buoyed by speculation of snap elections in Japan that could pave the way for new fiscal stimulus measures, and investors are preparing for corporate earnings season after seeing the figures from US investment bank JP Morgan on Tuesday.
Against this backdrop, at 0805 GMT on Wednesday, Spain's IBEX 35 benchmark index was up 93.90 points, or 0.53%, at 17,781.00 points, its highest level ever, while the pan-European blue-chip FTSE Eurofirst 300 index rose 0.18%.
In the banking sector, Santander gained 0.19%, BBVA added 0.71%, Caixabank advanced 0.19%, and Sabadell slipped 0.42%.
Among major non-financial stocks, Telefónica fell 0.18%, Inditex rose 0.81%, Iberdrola gained 1.04%, Cellnex was up 0.34%, and oil company Repsol lost 0.31%.
(Reporting by Tomás Cobos; editing by Benjamín Mejías Valencia)
