Various signs indicate that investors believe the Russia-Ukraine war is close to an end. The new government in the United States is forcing Ukraine to come into the negotiating table and investors believe it will happen soon. One of the obvious signs are the European Stock markets. Especially defence stocks witnessed a very strong buying pressure. Hensoldt, Leonardo, and Rheinmetall’s market valuations have more than doubled since Mr. Trump was re-elected. Those of two American equivalents, Lockheed Martin and L3Harris, have decreased by more than 10% over the same time frame.It means market predicts that Europe would pay much more on its defence in the coming years. The euro itself and European stocks in general have also been strong. Europe’s Stoxx 600 index has outperformed the S&P 500 index by 14% in dollars so far this year, a remarkable outperformance trend. The DAX in Germany has increased by about 25%. The euro’s value has soared from a low of $1.02 to $1.08, while analysts were only wondering if it would fall to parity with the dollar.
Another sign is from the Russian economy, the value of the ruble fell near the end of 2024, but it has increased by around 25% vs the dollar this year so far. The possibility that US sanctions would be eased is driving up the share prices of companies that are associated with Russia but are traded outside. Russian officials are making an effort to get international corporations who ceased operations in the nation in 2022 to return. According to the Financial Times, they have been calling these businesses to talk about reopening. According to Russian media, Visa, Mastercard, and Coca-Cola are all thinking about making a return.
Source: Economist
