Defense and energy in focus as Trump pushes Ukraine toward peace deal

[U.S. President Trump And Russian President Putin Meet On War In Ukraine At U.S. Air Base In Alaska]
Andrew Harnik/Getty Images News

Defense stocks and energy markets are set to dominate attention this week after U.S. President Donald Trump signaled he wants Ukraine to accept a swift peace agreement with Russia, raising the prospect of a major geopolitical realignment, Reuters reported Sunday.

Trump and Russian President Vladimir Putin ended a summit in Alaska without securing a ceasefire, but the U.S. leader said he now expects Kyiv to move quickly toward a settlement. Ukrainian President Volodymyr Zelenskiy is heading to Washington on Monday for talks joined by German, British and French leaders.

Analysts warned the U.S. could scale back support for Kyiv in favor of economic opportunities with Moscow.

Trump seems inclined to reduce or even end U.S. support for Ukraine amid the possibility of business deals with Russia, Holger Schmieding, chief economist at Berenberg, noting the potential lifting of U.S. sanctions on Russia, said to Reuters. Such a shift would leave Europe to increase defense spending.

European defense firms have already soared since Russia’s 2022 invasion, with Leonardo (OTCPK:FINMF [https://seekingalpha.com/symbol/FINMF]) (OTCPK:FINMY [https://seekingalpha.com/symbol/FINMY]) up more than 600% and Rheinmetall (OTCPK:RNMBF [https://seekingalpha.com/symbol/RNMBF]) (OTCPK:RNMBY [https://seekingalpha.com/symbol/RNMBY]) gaining 1,500%. The euro has climbed 13% against the dollar this year, last trading near $1.17 (EUR:USD [https://seekingalpha.com/symbol/EUR:USD]).

Energy markets are also sensitive to the outcome. Bank of America strategist Michael Hartnett pointed to U.S.-Russia Arctic drilling potential covering as much as 15% of untapped global oil reserves and 30% of natural gas. Brent crude (CO1:COM [https://seekingalpha.com/symbol/CO1:COM]) slipped to about $66 a barrel on Friday, still reflecting hopes for a peace deal.

Ukraine’s government bonds, which rallied earlier on summit optimism, have stalled around 55 cents on the dollar.

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