LONDON/SINGAPORE- European futures hit record peaks on Tuesday as defense stocks soared on expectations of a spending bump, while Hong Kong shares were on the verge of three-year highs as investors cheered business leaders’ meeting with President Xi Jinping.
Australia’s central bank began its rate cut cycle, as expected, and the Australian dollar found support at $0.6350 as a cut came with caution on further easing.
S&P 500 futures were up 0.2 percent and European futures were up 0.1 percent. Japan’s Nikkei rose 0.5 percent with bank and defense-related shares taking cues from Europe’s rally.
On Monday, the pan-European STOXX 600 index closed 0.5 percent higher as a gauge of defense and aerospace stocks surged 4.6 percent to lifetime peaks, having already more than doubled in value since Russia invaded Ukraine three years ago.
Investors expect earnings in the industry to continue to rise strongly, driven by a significant surge in defense budgets to meet new security needs – which analysts have dubbed a “supercycle” for the sector.
Hopes for an end to hostilities in Ukraine also improved sentiment in other sectors in Europe.
“A resolution to the conflict in Ukraine could deliver positive growth impulses for Europe, including improved consumer confidence, lower energy prices, and easier financial conditions,” Bruno Schneller, managing director at Erlen Capital Management.
