Even though Wall Street stocks lag world markets this year, the S&P500 still managed to wring out another record high on Tuesday — with a mix of new tariff threats, housing updates and Federal Reserve minutes to digest later today.

A confusing and turbulent start to the year has seen global investors' attention switch away from pricey U.S. equity to cheaper European stocks and Chinese tech — with this week's talks on ending the Ukraine war and Germany's weekend election catalyzing interest in the former. The rapid turnaround in portfolio investment allocations and mutual fund flows this year is eye catching, but so too is the shift in economic news relative to some extreme expectations.

Economic surprise indexes compiled by Citi show the euro zone gauge at its most positive in eight months while the U.S. equivalent has slipped back into negative territory — with the gap between the two at its most favorable to Europe since July.

Still, these are all relative measures and — for now at least — the still upbeat global activity picture is lifting all boats. And that's allowed U.S. indexes to keep nudging higher even as global investment portfolios rebalance.

U.S. futures held the latest marginal stock into Wednesday As to the hot button geopolitical issues of the moment, they continue to rankle overnight — as US President Donald Trump re-iterated threats to impose 25% tariffs on autos, drugs and chips while tensions built around the controversial Ukraine talks.

Washington's decision to bypass Ukraine and talk directly to Russia about ending the war has raised major concerns about attempts to unseat Kyiv's government as part of the deal. With barely concealed anger in Europe at the absence of Ukraine President Volodymyr Zelenskiy from the talks in Saudi Arabia, European Union leaders are now bracing for a ratcheting up of future security risks, pushing to up defense spending and ways to fund it.

Markets are scrambling to price the shift, with European defense stocks surging this week while talk of higher public spending in Germany after the weekend election has encouraged bets on a wider reboot of the euro bloc. Talk of a rapid defense push has also spurred talk of another round of joint European borrowing, akin to that seen during the post-pandemic rebuild.

That's both seen benchmark German bund yields rise further as well as squeezing the risk spread between Germany and other euro sovereigns. Italy's 10-year spread has hit its narrowest in 3-1/2 years while the recently elevated French spread is back at its lowest since July.

The euro itself slipped back on Wednesday — in part as the renewed Trump tariff threats nudged the dollar and U.S. Treasury yields back higher.

Gold prices jumped to another all-time high on both trade and military tensions as well as incoming inflation news. Spot gold hit an all-time-high of $2,946.75/oz - the ninth record notched so far this year.

Benchmark bond yields around the world were also aggravated by the sweep of disappointing inflation reports. Mirroring January's 'hot' U.S. consumer price inflation report last week, both Canada and Britain saw above forecast annual CPI gains last month too - with the latter's inflation rate popping back as high as 3%.

Sterling firmed to its best levels since January 2 against the euro and UK gilt yields increased on Wednesday as hopes for a more rapid Bank of England easing trajectory were set back. Regardless, the Reserve Bank of New Zealand felt no such constraint overnight and cut its benchmark rate by 50 basis points to 3.75% — flagging further reductions in borrowing costs amid moderating inflation there.

The kiwi dollar held steady after the expected move.

Back on Wall Street, housing starts and the Federal Reserve's latest meeting minutes top the diary — with the tail end of the earnings season also still streaming in.

Key developments that should provide more direction to U.S. markets later on Wednesday:

* US January housing starts/permits, New York Fed's February service sector survey

* Federal Open Market Committee publishes minutes from Jan 28/29 meeting; Fed Vice Chair Philip Jefferson speaks

* US corporate earnings: Analog Devices, ANSYS, American Water Works, Garmin, Progressive, Cadence Design Systems, Texas Pacific, CF Industries, Nordson, Charles River, Host Hotels & Resorts, Trimble etc

* U.S. Treasury sells $16 billion of 20-year bonds