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(Bloomberg) — Stocks in Asia are broadly set to track gains in Europe, where the likelihood of greater military spending lifted shares in defense companies and bond yields.

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Shares were little changed in early trading in Sydney, while futures pointed to a gain in Hong Kong, a flat open in Tokyo and an advance in US benchmarks after a holiday on Monday. Europe’s Stoxx 600 index rose 0.5% and 10-year bund yields — the benchmark borrowing rate for the euro area — reached the highest in more than two weeks.

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The US asked European nations to spell out what security guarantees and equipment they can offer Ukraine to ensure a lasting peace settlement. European officials say they are working on a major package to ramp up defense spending and some EU leaders are meeting in Paris to draw up their response. 

“The goalposts are shifting, and the EU is realizing they can rely less and less on the US for protecting their borders. In lockstep, we’re going to have to see European countries spend more on defense,” said Aneeka Gupta, head of macro research at Wisdomtree UK Ltd. “That does warrant a bit more caution on bonds.”

The developments have cemented the view that debt sales will need to increase as European nations shoulder the cost of a lasting peace deal between Ukraine and Russia. Upgrading defense and protecting Ukraine may cost Europe’s major powers an additional $3.1 trillion over 10 years, according to Bloomberg Economics estimates.

In Asia, the Australian dollar held near a two-month high before a central bank meeting that’s expected to see the first rate cut in four years. The Aussie’s gain came as a gauge of dollar strength declined for a third day. Meanwhile, BHP Group Ltd.’s first-half profit slumped 23% in results released early Tuesday, as the world’s biggest public miner said it was impacted by falling Chinese demand for key commodities including iron ore and copper.

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The Reserve Bank of Australia is widely expected to embark on easing on Tuesday, with its first rate cut since November 2020. However, a strong labor market, resilient consumer spending, robust credit growth and a weaker currency could make the case for a hold, said Bloomberg Economics economist James McIntyre. 

Also in Asia, optimism around a revival in China’s economy was boosted Monday after a meeting between President Xi Jinping and business figures including Alibaba Group Holding Ltd. co-founder Jack Ma raised hopes that a years-long crackdown on the private sector is ending. 

In the US, Federal Reserve Governor Christopher Waller said recent economic data support keeping interest rates on hold, but if inflation behaves as it did in 2024, policymakers can get back to cutting “at some point this year.”

Some of the key events this week: 

• Australia rate decision, Tuesday
• UK jobless claims, unemployment, Tuesday
• Bank of England Governor Andrew Bailey speaks, Tuesday
• Canada CPI, Tuesday
• New Zealand rate decision, Wednesday
• Indonesia rate decision, Wednesday
• UK CPI, Wednesday
• South Africa CPI, retail sales, Wednesday
• US FOMC minutes, housing starts, Wednesday
• Australia unemployment, Thursday
• China loan prime rates, Thursday
• Eurozone consumer confidence, Thursday
• G-20 foreign ministers meet in South Africa, Thursday – Friday
• Reserve Bank of Australia Governor Michele Bullock and officials testify to parliamentary committee, Friday
• Japan CPI, Friday
• Eurozone HCOB manufacturing & services PMI, Friday
• UK S&P Global manufacturing & services PMI, Friday
• US S&P Global manufacturing & services PMI, Friday
• Bank of Canada Governor Tiff Macklem speaks, Friday

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Some of the main moves in markets:

Stocks

• Australia’s S&P/ASX 200 was little changed as of 8:06 a.m. Tokyo time
• S&P 500 futures rose 0.2%
• Hang Seng futures rose 0.3%
• Nikkei 225 futures were little changed

Currencies

• The Bloomberg Dollar Spot Index was little changed

Cryptocurrencies

• Bitcoin fell 0.4% to $96,011.76
• Ether fell 1.1% to $2,746.72

Bonds

• Australia’s 10-year yield declined one basis point to 4.44%

Commodities

• West Texas Intermediate crude rose 0.7% to $71.27 a barrel
• Spot gold was little changed

This story was produced with the assistance of Bloomberg Automation.

—With assistance from Sujata Rao.

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