European leaders rush to assist Ukraine in US talks
Analysts hyperlink US-Russia ties to Arctic power offers
Oil and gasoline might enter “deep” bear market – BofA
European defence spending to ramp up – Berenberg
By Naomi Rovnick and Dhara Ranasinghe
LONDON, Aug 17 (Reuters) – Defence shares and power markets are prone to be in focus this week, as European leaders rushed to again Ukraine in talks with U.S. President Donald Trump which will strain Kyiv to simply accept a peace deal favouring Russia.
Buyers are expecting indicators that the U.S. might transfer nearer to Russia in a bid to use huge, untapped Arctic power sources, in a serious geopolitical shift that piles strain on Europe to quickly enhance defence spending.
Trump and Russian President Vladimir Putin ended their weekend summit in Alaska with out securing a Ukraine ceasefire settlement, with the U.S. President then saying he now needed a fast peace deal that Kyiv ought to settle for.
Ukrainian President Volodymyr Zelenskiy is travelling to Washington on Monday for talks that leaders of countries together with Germany, the UK and France will now be a part of.
“Trump appears inclined to scale back and even finish US assist for Ukraine. Putin received him all for enterprise offers,” Berenberg Chief Economist Holger Schmieding mentioned in a observe to shoppers.
“In consequence, the US might elevate its sanctions on Russia and put money into Russia as a substitute,” he added.
“Europe may have to spend so much extra for its personal defence.”
DEFENCE STOCK RALLY Buyers have guess on that consequence since February 2022, driving a supercharged rally in European aerospace and defence shares with beneficial properties of over 600% for Leonardo and 1,500% for Germany’s Rheinmetall.
The euro has rallied 13% in opposition to the greenback this yr and traded at about $1.17 on Friday.
Financial institution of America strategist Michael Hartnett highlighted the potential for U.S.-Russia Arctic drilling initiatives to use 15% of the world’s undiscovered oil and 30% of the world’s undiscovered pure gasoline, leading to a deep power bear market. Brent crude, which dropped greater than 1% to close $66 a barrel, on Friday, was nonetheless priced for a Ukraine peace deal, Hartnett cautioned, whereas Trump needed decrease power costs for U.S. shoppers. Ukraine’s authorities bonds – key temper indicators – rallied when information of the summit emerged earlier this month however have stalled at a still-distressed 55 cents per greenback. “I might assume they are going to be a bit weaker following the latest power because the temper appears to favour Russia following Friday’s summit,” Aegon Asset Administration head of rising market debt Jeff Grills mentioned.
(Reporting by Naomi Rovnick and Dhara Ranasinghe ; further reporting by Samuel Indyk, Marc Jones and Alun John in London; modifying by Sharon Singleton)
