Sources briefed on Moscow's thinking have revealed peace proposals to discuss an end to the Ukraine war, involving significant territorial concessions from both sides. Under these proposals, Russia would cede tiny pockets of occupied Ukrainian territory, while Kyiv would, in return, cede swathes of its eastern land which Moscow has been unable to capture. This emerged a day after a summit between US President Donald Trump and Russian President Vladimir Putin in Alaska, the first encounter between a US president and the Kremlin chief since the conflict began.

Ukrainian President Volodymyr Zelenskyy is scheduled to travel to Washington to discuss a potential settlement of the war with Trump. In a Fox News interview, Trump stated he had discussed land transfers and security guarantees for Ukraine with Putin and that they had "largely agreed" on these points, adding that it is up to Ukraine's agreement. Sources informed on Moscow's thinking suggest these proposals may not be a final offer and could serve as a starting point for negotiations, while simultaneously posing significant challenges for the Ukrainian leadership, particularly concerning territorial concessions.

The proposed Russian terms include a full Ukrainian withdrawal from the eastern Donetsk and Luhansk regions, in exchange for a Russian pledge to freeze front lines in the southern Kherson and Zaporizhzhia regions. This directly contradicts Kyiv's stance, which rejects any withdrawal from Ukrainian land, especially from Donetsk, which it views as a crucial defensive structure against deeper Russian attacks. Russia also seeks formal recognition of its sovereignty over Crimea, the lifting of some sanctions imposed on the country, and barring Ukraine from joining the NATO military alliance, while appearing open to discussing security guarantees.

Market Signals

Sector impacts and opportunities: Potential easing of sanctions on Russia could further depress oil prices, impacting the energy sector. Agricultural prices may stabilize. The defense industry could see a slowdown in long-term growth.
Price movements and volatility: Stock and commodity markets may experience volatility depending on the outcome of negotiations. Oil prices (Brent) have fallen to a two-month low of $65.63/bbl.
Competitor positioning changes: Companies that have benefited from the war (e.g., defense, certain energy producers) may see their competitive advantages diminish.

Winners & Losers

Consumers may benefit from lower energy and food prices. Industries affected by high energy costs (e.g., chemicals, transportation) might see reduced operational costs. In the long term, defense companies may experience reduced demand. Supply chains, particularly in agriculture and energy, could stabilize, but infrastructure damage in Ukraine remains a significant factor.

Action Timeline

Immediate (24-48h): Monitor the Zelenskyy-Trump meeting, track market reactions, and assess exposure to affected sectors.
Short-term (1-2 weeks): Evaluate potential trade policy and sanctions changes, and adapt strategies to a post-settlement environment.
Long-term: Re-evaluate investments in defense and energy sectors, monitor Ukraine's reconstruction efforts, and assess long-term geopolitical stability.

Risk Assessment

Regulatory risks: Monitor new regulatory frameworks related to sanctions relief.
Market volatility: Market sensitivity to any breakdown in negotiations or renewed escalation.
Geopolitical tensions: The risk of conflict reigniting if security guarantees are insufficient.

Key Indicators

A clear signal of a significant development in the war's trajectory.
Leading indicators: Outcome of the Zelenskyy-Trump meeting, statements from European leaders, official Russian and Ukrainian responses.

Regional Perspective

Detailed insights into President Putin's peace terms, particularly regarding territorial concessions and other conditions.

Immediate Implications

The Zelenskyy-Trump meeting is a pivotal moment.
Monitor commodity and stock market movements, assess exposure to key sectors.

What to Watch

Outcome of the Zelenskyy-Trump meeting.
Stance of European leaders and their commitment to security guarantees for Ukraine.
Specifics on sanctions relief for Russia.
Price trends for key commodities, especially oil and gas.

Analysis

The upcoming meeting between President Zelenskyy and President Trump is a critical moment. Businesses should closely monitor the meeting's outcome, reassess their investment portfolios, prepare for potential sanctions relief on Russia, and stay informed about European responses.