European Defense Spending At The Center Of Attention – Europe Market Wrap
European stocks held close to record highs and bonds extended declines on expectations governments will need to ratchet up military spending.
German 10-year bund yields, the benchmark borrowing rate for the euro area, rose to the highest in more than two weeks, extending the previous day’s six-basis point increase. British gilt yields climbed even more, lifted also by data showing a resilient jobs market and robust wage growth.
S&P 500 contracts rose 0.3% while those on the Nasdaq 100 edged up 0.4% after Monday’s holiday. In Europe, the Stoxx 600 index held near record highs, with defense stocks rallying further on expectations that governments will have to ratchet up military spending. A gauge of emerging-market equities hit a three-month high.
The war in Ukraine continues to dominate markets in Europe as traders await details on new defense funding measures and officials the region fume after being excluded from US-Russia talks in Saudi Arabia. New measures are due to be presented in time for an upcoming March 20-21 summit, according to Polish Prime Minister Donald Tusk.
Treasuries, reopening after a public holiday, saw yields tick higher, while the dollar advanced against Group-of-10 peers. The Australian dollar steadied after an earlier fall, as the central bank lowered rates but warned the move did not imply further cuts along the lines markets are pricing.
In commodities, gold extended gains to trade around $2,910 an ounce after Goldman Sachs analysts raised their year-end gold target to $3,100. Prices for the precious metal are up almost 11% so far this year.
