Following the Trump-Putin summit, the focus has shifted from a ceasefire to a broader "peace agreement," with discussions on sanctions against Moscow deferred. As the world awaited the meeting's outcomes, former US President Donald Trump announced via his social network "Truth Social" that the objective is to achieve a "peace agreement" that ends the war, rather than a mere ceasefire, which often proves temporary. This shift in diplomatic strategy favors Russia, which has recently made advances in eastern Ukraine. Russian President Vladimir Putin insists on addressing the "root causes" of the conflict, including Ukraine's aspirations to join NATO.

Meanwhile, Russian forces launched drone and missile attacks on Ukraine during the night of Friday to Saturday, announcing the capture of two towns in the east of the country. On the sanctions front, a US ultimatum for Russia to end the war in Ukraine was set to expire, threatening "secondary" sanctions targeting countries trading with Russia, particularly in oil and arms. However, Trump indicated he would not consider these sanctions at the moment, raising concerns among European allies who have reaffirmed their commitment to further strengthening sanctions to increase pressure on the Russian economy.

Territorial issues remain unresolved, with Ukraine fearing that any agreement might lead to territorial concessions, especially since Russia occupies about 20% of Ukrainian territory. Regarding security guarantees, Ukraine, supported by Europeans, has demanded robust guarantees to prevent a resumption of Russian invasion, a stance Moscow firmly rejects. Although Trump and Putin did not directly address these points, Trump indicated that only a few issues remain to resolve the conflict, including "the most important one." Trump has scheduled a meeting with Ukrainian President Volodymyr Zelenskyy, with the possibility of a trilateral meeting later.

Market Signals

Energy Markets: Trump's decision to potentially pause tariffs on countries buying Russian oil could sustain Russian oil flow, possibly exerting downward pressure on oil prices in the short term.
Aerospace and Defense: This sector has seen a "supercharged rally" since early 2022 due to the conflict. A de-escalation could lead to a slight pullback, but the underlying drivers like geopolitical tensions and increased European defense spending remain.
European Markets: Europe's reliance on Russian gas has made its economy and stock markets vulnerable to surging energy prices. Sectors dependent on low energy prices could see a recovery if a resolution materializes.

Winners & Losers

Winners: Aerospace and defense companies, companies focused on energy diversification. Losers: European industries reliant on cheap energy, the Russian economy impacted by sanctions, and the war-devastated Ukrainian economy.

Action Timeline

Immediate (24-48h): Monitor reactions to the deferral of US sanctions on Russia.
Short-term (1-2 weeks): Assess the likelihood of a trilateral meeting and its impact on negotiations.
Long-term: Track developments in potential peace agreements and their impact on energy and strategic commodity prices.

Risk Assessment

Geopolitical Tensions: Persistence of the conflict's underlying drivers and the instability of any agreements.
Market Volatility: Sensitivity of global stock markets and commodity prices to geopolitical developments.
Sanctions Evasion: Russia's ability to circumvent Western sanctions.

Key Indicators

Clear Signal: The shift towards a "peace agreement" instead of a ceasefire.
Leading Indicators: Trump's decisions on sanctions and the outcomes of the upcoming trilateral meeting.

Regional Perspective

Europe: Concern over the implications of deferring US sanctions, with an emphasis on continuing economic pressure on Russia. Ukraine: Fear of territorial concessions and emphasis on the need for strong security guarantees.

Immediate Implications

What's Next: Awaiting the meeting between Trump and Zelenskyy.
Immediate Opportunities or Risks: Continued uncertainty in energy and commodity markets.

What to Watch

Leading Indicators: Outcomes of the trilateral meeting, new European sanctions packages.
Expected Developments: Defining the future negotiation path.
Key Decision Points: The extent of parties' commitment to potential peace agreements.

Analysis

The shift in focus from a ceasefire to a "peace agreement" represents a significant diplomatic move but raises questions about expected concessions from Ukraine. Businesses should closely monitor energy and strategic commodity markets, the defense sector, and geopolitical developments to capitalize on opportunities and mitigate risks.