(Bloomberg) — US equity futures pointed to a higher open on Wall Street as a meeting between Russian and US officials raised hopes of an end to the three-year war in Ukraine.
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S&P 500 contracts rose 0.3% while those on the Nasdaq 100 edged up 0.4% after Monday’s holiday. Intel Corp. jumped 5% after the Wall Street Journal reported that Taiwan Semiconductor Manufacturing Co. and Broadcom Inc. are mulling deals that would break up the US chip giant. Super Micro Computer Inc. and Micron Technology Inc. also rose.
Russia and the US held talks in Saudi Arabia on Tuesday, potentially paving the way for President Donald Trump and Russia’s Vladimir Putin to meet. The US side has described the talks as exploratory and to determine whether Moscow is serious about ending the war in Ukraine. European defense stocks such as Rheinmetall AG and Dassault Aviation SA rallied on expectations the region will have to ratchet up military spending.
The mood on equities remains bullish overall, with a Bank of America Corp. survey showing global stocks are the most popular asset class with investors. Fund managers’ cash levels have dropped to the lowest since 2010, indicating greater willingness to take on risk.
“The prospect of the war in Ukraine coming to an end is very positive,” said Tim Graf, head of EMEA macro strategy at State Street Bank and Trust Co. “Underneath it all is defense spending, which will be good for US defense contractors, but also European industrials and defense contractors.”
The spending concerns weighed on European bonds, however, with German 10-year yields — the benchmark borrowing rate for the euro area — touching the highest in more than two weeks. As US Treasuries trading resumed, 10-year yields rose 4.5 basis points.
Attention is refocusing on the Federal Reserve’s interest-rate path, with Governor Christopher Waller saying recent economic data supports keeping rates on hold until more progress is seen on inflation. His comments helped the dollar advance against Group-of-10 peers.
Fed officials Mary Daly and Michael Barr are due to speak Tuesday, while minutes from the central bank’s latest policy meeting will be released on Wednesday.
Gold extended gains to trade around $2,915 an ounce after Goldman Sachs Group Inc. analysts raised their year-end gold target to $3,100. Prices for the precious metal are up almost 11% so far this year.
