Mike Dolan provides insight into the upcoming day in U.S. and global markets. European defense stocks, which have seen a nearly 20% increase so far this year, grew by 1% on Tuesday amidst discussions between Russian and Saudi officials regarding the conflict in Ukraine, and preparations for Germany's upcoming elections.
After the President's Day holiday closure on Monday, U.S. markets are anticipated to reopen on a positive note with stock futures near record highs. European markets are drawing value investors back due to a significant valuation discount compared to the S&P500.
Euro zone stocks have outperformed American benchmarks this year, with the German DAX reaching a record high. The potential for increased public investment in Europe, especially in Germany, has encouraged investors despite looming U.S. trade tensions.
The focus on defense spending is prominent in current market movements, with speculation arising about the EU re-engaging in joint sovereign borrowing to fund defense. European defense sector stocks, including Rheinmetall, Thyssenkrupp, Leonardo, Saab, and BAE Systems, have experienced notable growth.
In the context of defense spending and the German election, bond yields in Germany have risen, though expectations of further European Central Bank easing persist. Currency markets show fluctuation, with the euro retreating from recent highs and the dollar regaining strength.
Global market activity includes a rally in Chinese tech stocks following positive meetings with tech entrepreneurs and expectations of a regulatory shift. On Wall Street, housing and manufacturing data lead economic indicators, and corporate earnings season is nearing completion, with strong annual profit growth.
Upcoming events that may influence U.S. markets include housing and manufacturing data releases, speeches by key figures like Mary Daly and Andrew Bailey, corporate earnings reports, U.S. Treasury bond sales, and the World Trade Organization's gathering in Geneva.