Despite good news from Statistics Canada on the leading economic indicators and a rate decrease expected from the U.S. Federal Reserve, tomorrow, early futures trading is trending lower Monday, foreshadowing a poor trading day for equities.

Investors seem to be ignoring fundamentals entirely. Their attention is distracted by geopolitics as this is the week when a shift to war — or not — is expected.

Some American analysts are hailing the benefits of war. When the Gulf War began the S&P 500 jumped 3.7% and climbed to 12% higher and stayed there, with the exception of oil, which dropped 20%. But U.S. fundamentals are not in good shape, so the question remains: What will happen to the markets even if the war is a quick one?

Well, the news is better in Canada at least. This morning, StatsCan reported that the composite leading index in February posted its largest increase in seven months, up 0.3%, driven by renewed vigor in housing-related demand.

Overall, five components were up, three fell and two were unchanged. The growth of the leading index was hampered through most of 2002 by a bear market for stocks and a slumping U.S. economy, culminating in no growth in November.

It picked up to 0.2% in December as domestic demand strengthened, and its growth in January was revised up from 0.1% to 0.2%.

Housing rebounded strongly in February after a brief dip the month before, aided by another drop in the number of unsold vacant units. The increase was boosted by the volatile multiple units component, which, despite cold weather, nearly doubled to regain its highest level since the late 1970s. Starts of single-family homes recovered almost all of their retreat in January. Spurred by the gains in housing, furniture and appliance sales recorded their largest increase in nine months.

Of the three manufacturing components, two trended down: new orders for durable goods and the ratio of shipments to stocks. These largely reflect cuts in the auto and computer and electronic sectors in response to weak exports.

Overseas markets are down due to war worries. In Tokyo, the Nikkei Stock Average fell 131.05 points, or 1.64%, to 7,871.64. That’s marginally better than a just a 20-year low set March 11. In Hong Kong, the Hang Seng Index fell 152.01 points, or 1.7%, closing at 8,804.16.

European markets are also down. In London, the FTSE index is down slightly, 0.67% at midday. Paris’s CAC 40 has fallen 2.44%. Frankfurt’s DAX is off 1.6%.