Stock markets in Europe were driven higher by buoyant defence stocks as leaders across the continent gathered to discuss their sidelining in Russia-Ukraine peace talks.
Germany’s DAX 30 gained 1.3% and the UK’s FTSE 100 index advanced 0.4% as defence stocks across Europe rallied on proposals to exempt military spending from European Union limits on government expenditure. The UK’s BAE Systems, Germany’s Thyssenkrupp and Rheinmetall, Sweden’s Saab and Italy’s Leonardo were all stronger.
High-tech components maker Rakon is one of the few NZX-listed companies with exposure to the defence sector.
Wall Street was closed for the Presidents’ Day public holiday, with S&P 500 futures up 0.2%.
“Following moves by the White House to negotiate with Russia to end the Ukraine war and VP (Vice President JD) Vance’s forthright speech to European leaders over the weekend that signals less US involvement in European defence, EU leaders are convening in an emergency meeting to discuss the Ukraine war and ways to boost European defence spending,” Bank of New Zealand senior markets strategist Jason Wong said in a note. “European gas prices continue to tumble off a high base, with the front contract now down some 18% in a week, as the market anticipates an eventual end to the war and more Russian gas entering the supply chain.”
Oil prices edged higher with Brent crude oil futures up 0.5% at US$75.12 a barrel at 7am.
The kiwi dollar was little changed at 57.39 US cents at 7am from 57.36 cents yesterday, and traded at 54.75 euro cents from 54.66 cents.
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In China, President Xi Jinping met with IT leaders yesterday and pledged support for the private sector. Among the entrepreneurs was Alibaba founder Jack Ma, who has kept a low profile since he was rebuked by the administration several years ago.
BNZ’s Wong said that was seen as a strong signal that China’s crackdown on the tech sector is over.
“Xi promised to abolish unreasonable fees or fines against private firms and level the competitive playing field, a signal that private companies will have a fairer chance against state-dominated companies,” Wong said.
The Reserve Bank of Australia is expected to cut its target cash rate a quarter-point to 4.1% today, although inflationary pressures from a stronger labour market have some analysts saying it’s a line-call for the central bank. The kiwi traded at 90.17 Australian cents from 90.12 cents yesterday.
That’s ahead of New Zealand’s central bank policy review on Wednesday, which is widely anticipated to deliver a 50 basis point cut to lower the official cash rate to 3.75%.
Corporate earnings season continues in the antipodes today, with miner BHP Group the big result in Australia.
Australian futures are pointing to a 0.2% increase for the S&P/ASX 200 index today.
Meanwhile, the Australian Financial Review’s Street Talk column reported Infratil and the Future Fund used their pre-emption rights to buy the 12.5% stake in CDC Data Centres being sold by Commonwealth Superannuation Corp.
Reporting by Paul McBeth. Image from SaiKrishna Saketh Yellapragada on Unsplash.