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Science and Technology
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Science and Technology
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Premarket: Global indexes edge higher as investors focus on geopolitics and U.S. inflation data

Premarket: Global Indexes Edge Higher as Investors Focus on Geopolitics

Global stock indexes showed modest gains in premarket trading on Wednesday, as investors navigated a landscape dominated by geopolitical tensions while keeping an eye on upcoming economic data and corporate earnings. Futures tied to major U.S. benchmarks pointed to a slightly positive open, reflecting a cautious optimism amid concerns over escalating conflicts in the Middle East and ongoing uncertainties in U.S.-China relations. The S&P 500 futures rose by 0.2 per cent, while Dow Jones Industrial Average futures gained 0.1 per cent, and Nasdaq-100 futures advanced 0.3 per cent. This uptick followed a mixed session on Wall Street the previous day, where technology stocks provided some lift but broader market sentiment remained subdued.

In Europe, markets opened higher, building on the positive momentum from Asia. The pan-European STOXX 600 index climbed 0.4 per cent in early trading, driven by gains in sectors like energy and financials. London's FTSE 100 added 0.3 per cent, supported by rising commodity prices, while Germany's DAX index rose 0.5 per cent amid hopes for stabilizing economic indicators. France's CAC 40 also edged up 0.4 per cent. Investors in the region were particularly attuned to geopolitical developments, including reports of intensified diplomatic efforts to de-escalate tensions between Israel and Iran following recent missile exchanges. Analysts noted that any signs of progress in these talks could further bolster market confidence, though the risk of broader regional instability continues to weigh on sentiment.

Asian markets closed mostly higher, setting a positive tone for global trading. Japan's Nikkei 225 surged 1.2 per cent, buoyed by a weaker yen that benefited exporters like Toyota and Sony. The index has been resilient despite domestic economic challenges, including sluggish consumer spending and the Bank of Japan's cautious stance on interest rates. In China, the Shanghai Composite index rose 0.6 per cent, while Hong Kong's Hang Seng gained 0.8 per cent, as investors reacted to mixed signals from Beijing on stimulus measures. Recent data showed China's economy grew at a slower-than-expected pace in the third quarter, prompting calls for more aggressive fiscal support. However, ongoing trade frictions with the U.S., including potential new tariffs under a possible second Trump administration, added layers of uncertainty. South Korea's Kospi advanced 0.7 per cent, and Australia's S&P/ASX 200 climbed 0.5 per cent, with mining stocks leading the way amid rising metal prices.

Geopolitics remained the focal point for many investors, overshadowing other market drivers. The ongoing war in Ukraine continued to influence energy markets, with natural gas prices in Europe fluctuating amid supply concerns. In the Middle East, oil prices held steady but with an upward bias; Brent crude futures hovered around $74 per barrel, up slightly from the previous close, as traders monitored developments in Gaza and potential disruptions to shipping routes in the Red Sea. Gold, often seen as a safe-haven asset, rose 0.3 per cent to above $2,700 per ounce, reflecting heightened demand amid global uncertainties. Currency markets also reflected this caution, with the U.S. dollar index edging lower against a basket of major currencies, while the euro and British pound gained modestly.

On the economic front, attention was turning to key data releases that could shape expectations for central bank policies. In the U.S., investors awaited the latest weekly jobless claims figures and existing home sales data, which could provide insights into the health of the labor market and housing sector. The Federal Reserve's recent minutes indicated a measured approach to rate cuts, with officials emphasizing the need for more evidence of cooling inflation before further easing. Markets are pricing in about a 90 per cent chance of a 25-basis-point rate cut at the Fed's November meeting, according to CME FedWatch tools. In Europe, the European Central Bank is expected to deliver its own rate decision later this week, with economists forecasting another cut to combat sluggish growth.

Corporate news added some flavor to the premarket session. Shares of Tesla were in focus after the electric vehicle maker reported better-than-expected quarterly profits, driven by strong sales in China and cost-cutting measures. Futures for Tesla stock rose 2 per cent in premarket trading. Meanwhile, Boeing faced renewed scrutiny as union workers voted on a new contract proposal amid an ongoing strike that has halted production. In the tech sector, Microsoft and Alphabet were set to release earnings later in the week, with investors eager for updates on AI investments and cloud computing growth. On the commodities side, copper prices ticked higher on optimism about Chinese demand, while agricultural futures like wheat and corn remained stable.

Bond markets showed mixed signals, with U.S. 10-year Treasury yields dipping slightly to around 4.2 per cent, as investors sought safety amid geopolitical risks. This yield curve inversion persists, signaling potential recessionary pressures, though recent data has painted a more resilient picture of the U.S. economy. In emerging markets, indexes in Brazil and India saw gains of 0.4 per cent and 0.6 per cent, respectively, supported by commodity exports and domestic reforms.

Overall, the premarket mood was one of guarded optimism, with geopolitics acting as both a headwind and a potential catalyst for volatility. Analysts from firms like JPMorgan and Goldman Sachs cautioned that while current valuations appear reasonable, any escalation in global conflicts could trigger sharp pullbacks. Conversely, positive resolutions or strong economic data could propel indexes toward new highs. As trading sessions progress, market participants will likely remain vigilant, balancing short-term risks with longer-term opportunities in a complex global environment. This dynamic underscores the interconnectedness of geopolitics and financial markets, where headlines from distant regions can ripple through portfolios worldwide. Investors are advised to monitor developments closely, particularly in energy and technology sectors, which are most exposed to these uncertainties. (Word count: 912)

Read the Full The Globe and Mail Article at:
[ https://www.theglobeandmail.com/investing/markets/inside-the-market/market-news/article-premarket-global-indexes-edge-higher-as-investors-focus-on-geopolitics/ ]