Global markets are adopting a wait-and-see approach ahead of a crucial summit focused on Ukraine. The meeting between Ukrainian President Volodymyr Zelenskyy and US President Donald Trump, attended by several European leaders, is highly anticipated. This summit follows Trump's meeting with Russian President Vladimir Putin in Alaska, making the potential outcomes regarding a ceasefire, peace negotiations, security guarantees for Ukraine, and sanctions against Russia particularly significant. The direction Trump will take is also a key point of focus.

Stock markets, including the Oslo Stock Exchange and other European exchanges, have experienced a period of relative calm in the lead-up to the summit, with a slightly negative trend. Experts like Marius Aaserud, Head of Equities at Handelsbanken, emphasize the importance of clarifying the discussions between Trump and Putin. Aaserud anticipates that market movements will remain subdued until clear information emerges from the Ukraine summit, while expressing hope for tangible progress towards peace, albeit with some reservations.

Key Indicators

Impact on Defense Stocks: Analysts predict that defense company stocks, such as Kongsberg Gruppen, which have seen substantial gains since Russia's full-scale invasion of Ukraine due to increased defense spending in Europe, will be notably affected by any positive developments in Ukraine. Despite a retreat from peak levels, Kongsberg's stock remains strong long-term.
Calm Market Expectations: A cautious market sentiment has led to relative stability in oil and gas prices, while European equity markets show a slight downward trend.
Trading Volume: Trading volumes are expected to remain subdued as investors await greater clarity on the potential outcomes.

Regional Perspective

For Europe, this meeting represents a critical opportunity to shape future relations with Russia and Ukraine. A peace agreement could pave the way for Ukraine's reconstruction, opening up new investment opportunities and stimulating economic activity across the region, including the Nordic countries and Norway. However, the challenge lies in balancing economic interests with geopolitical considerations.

Analysis

Marcus Gavelli, an equity analyst at Pareto Securities, notes that any positive development in Ukraine will impact defense company stocks, with expectations of a slight downside for Kongsberg's share price. However, Gavelli believes a peace deal might not significantly alter the earnings estimates for these companies, given NATO's ongoing need to replenish its weapon stockpiles. On the other hand, experts suggest that any peace agreement would be broadly positive for the European economy by stimulating reconstruction and boosting economic activity. Aaserud highlights that a continued conflict scenario would benefit companies like Kongsberg Gruppen, but adds that even in the event of peace, increased defense spending by NATO would ensure sustained demand for these companies' products.