Asian markets and the U.S. dollar held steady on Tuesday as traders awaited Australia’s central bank rate decision and key corporate earnings from China. Meanwhile, European shares reached record highs, driven by expectations of increased defense spending amid ongoing Ukraine peace talks.
Asia & Australia
- The Australian dollar remained near a two-month high ahead of the Reserve Bank of Australia’s (RBA) rate decision, with markets pricing in an 89% chance of a 25 basis point cut.
- Japan’s Nikkei 225 rose 0.3%, while Hong Kong’s Hang Seng opened slightly higher, supported by President Xi Jinping’s rare meeting with business leaders.
- Shares in Baidu stabilized after Monday’s dip, with investors awaiting its earnings report, while Alibaba is set to report later this week.
- BHP shares rose 0.6% despite reporting their lowest first-half profit in six years, citing signs of economic recovery in China.
Europe & Defense Supercycle
- The pan-European STOXX 600 closed 0.5% higher, with aerospace and defense stocks surging 4.6% to record highs, fueled by increasing military budgets.
- European banks hit 17-year highs, benefiting from rising bond yields.
- France’s President Emmanuel Macron hosted an emergency Ukraine summit, while Britain expressed willingness to send peacekeeping troops to support any potential agreement.
- The euro hovered just below $1.05, while the British pound traded at $1.2603, nearing a two-month high ahead of key employment and inflation data.
U.S. Markets & Trade Uncertainty
- S&P 500 futures edged up 0.2%, though U.S. markets were closed Monday for Presidents’ Day.
- The threat of U.S. reciprocal tariffs has been postponed until April, though concerns remain over potential value-added tax levies on imports.
- The Financial Times reported that the European Commission may impose tougher import limits on certain foods to protect local farmers, aligning with U.S. trade policies.
Commodities & Energy
- Gold retreated from Friday’s record high of $2,895 per ounce after seven consecutive weeks of gains.
- Brent crude remained steady at $75.16 per barrel, as OPEC+ considered delaying planned supply increases set to begin in April, despite calls from former U.S. President Donald Trump to lower prices.
Looking Ahead
Markets will focus on key economic data releases, including global February flash business activity reports and Germany’s upcoming elections. Investors will also track Federal Reserve meeting minutes on Wednesday to assess interest rate expectations amid ongoing trade tensions.
