NYSE Feb 28 2012
The floor of the New York Stock Exchange. Reuters

U.S. stock index futures suggest a significantly higher opening to markets on Tuesday, as fears of a U.S.-led military strike on Syria subsided, after the U.S. administration, in what appeared to be a tactical retreat from its aggressive position, hinted Monday that it would call off plans to strike the Middle Eastern nation if Damascus handed over control of its chemical weapons to the international community.

A diplomatic solution to the Syria stand-off became apparent after Russia, taking a cue from U.S. Secretary of State John Kerry's comments, proposed that it would work toward getting Syria to giev up its chemical weapons stockpile in order to avert a strike on the country. Investors are expected to react positively to this development as a military strike on Syria was expected to jolt risk-sensitive markets by disrupting oil supplies, and lead to further instability in the Middle East while possibly escalating chances of terrorist attacks against U.S. interests around the world.

Futures on the Dow Jones Industrial Average were up 0.47 percent, while futures on the Standard & Poor's 500 Index were up 0.43 percent and those on the Nasdaq 100 Index were up 0.54 percent. Better-than-expected retails sales and industrial production data from China is also expected to aid investor sentiment.

In Europe, markets traded higher on Tuesday after data from China showed both retail sales and industrial production rose more than expected in August, and the latest indications from the U.S. and Russia pointed to a diplomatic solution for the Syrian crisis.

China’s industrial production in August rose 10.4 percent, year-on-year, beating expectations and the rate of increase in July, indicating resurgent growth in the world’s second-largest economy, which posted strong export and manufacturing growth in August after a slowdown earlier in the year. Industrial output in August was higher than a consensus figure of 9.9 percent and above July’s industrial output growth of 9.7 percent, data released by China’s National Bureau of Statistics showed.

The Stoxx Europe 600 index rose 1.11 percent, London’s FTSE 100 was up 0.79 percent, Germany's DAX-30 was up 1.57 percent and France's CAC-40 was trading up 1.17 percent.

In Asia too, most markets traded higher, with Japan’s Nikkei ending up 1.54 percent, while Australia’s S&P/ASX 200 gained 0.38 percent. In China, the Shanghai Composite index ended up 1.15 percent while Hong Kong’s Hang Seng Index gained 0.99 percent.

South Korea’s KOSPI Composite index added 0.98 percent for the day while India’s BSE Sensex rallied and was trading up 3.62 percent in late-afternoon trade.