Global Markets Tread Cautiously Amid Geopolitical Tensions and Economic Indicators

Global markets showed mixed behavior as investors awaited key events, including an Australian rate cut, Chinese company earnings, and geopolitical developments in Europe. European shares rose on defense spending prospects tied to Ukraine's peace efforts, while U.S. and Asian markets showed varied performance influenced by economic and political factors.

Global markets exhibited a cautious stance on Tuesday, as traders kept an eye on critical developments including potential rate cuts in Australia and Chinese corporate earnings reports. This cautiousness was mirrored in Asian shares and the dollar's stabilization, while European shares hit new records driven by defense spending expectations amid Ukraine peace negotiations.

Overnight trading activity saw a 0.2% uptick in S&P 500 futures and a steady performance in European futures during Asian morning sessions. Japan's Nikkei rose 0.3%, and the STOXX 600 index benefited from a defense and aerospace stocks surge. Investors anticipate continued robust industry growth due to heightened defense budgets, marked as a 'supercycle' by analysts.

Macroeconomic indicators also painted a varied global picture. The euro remained just below $1.05, yen was strong post-growth data, and the pound hovered near its peak due to upcoming employment and inflation reports. In commodities, gold retraced recent highs, while discussions around oil supply and trade policies continued to influence market sentiment.

(With inputs from agencies.)