Key points
- European markets (DAX, CAC 40, FTSE 100) saw gains following a meeting between Presidents Trump and Zelensky.
- Peace optimism boosted sentiment, although a deal remains distant with ongoing Russian attacks.
- Defense stocks weakened on peace hopes, while luxury stocks and some specific companies saw gains.
- Oil prices fell on prospects of a three-way talk involving Russia, potentially lifting sanctions.
European stock markets experienced a surge on Tuesday, fueled by a cautiously optimistic outlook following a meeting between U.S. President Donald Trump and Ukrainian President Volodymyr Zelensky in Washington. The DAX in Germany climbed 0.45%, the CAC 40 in France rose 1.21%, and the FTSE 100 in the UK increased by 0.34%.
This positive market sentiment stemmed from hopes for a potential de-escalation of the ongoing conflict in Ukraine. Trump indicated U.S. support for Ukraine’s security, while also suggesting the possibility of trilateral talks involving Russia.
However, despite the positive spin, the path to peace remains fraught with challenges. Russia launched a significant attack overnight, involving hundreds of drones and missiles, highlighting the continuing intensity of the conflict.
A major sticking point is the territorial dispute, with Ukraine demanding the return of occupied land, a position unlikely to be easily conceded by Russia. The war’s prolonged duration has already significantly disrupted global supply chains, contributing to elevated commodity prices and hindering economic growth worldwide.
The focus now shifts to the upcoming Jackson Hole economic symposium, where key central bankers, including Federal Reserve Chairman Jerome Powell, ECB President Christine Lagarde, and Bank of England Governor Andrew Bailey, will be speaking. Their remarks are expected to provide significant insight into the direction of monetary policy in the coming months.
Meanwhile, the European defense sector experienced a downturn following the peace talks, with companies like Renk, Saab, and Leonardo experiencing sharp declines. Conversely, luxury brands such as Moncler and Burberry saw gains, suggesting investor confidence in the resilience of the luxury goods market.
Elsewhere, positive financial reports surfaced from some individual companies. Huber+Suhner, a Swiss connectivity solutions provider, reported an 8.5% increase in operating profit for the first half of 2025, driven by strong demand in key sectors.
Conversely, Coloplast reported a 26% decline in net profit due to extraordinary tax expenses. International Workplace reported record system-wide revenue of $2.2 billion for the first half of 2025.
In energy markets, oil prices dipped on Tuesday, reflecting the increased probability of a three-way dialogue that could lead to the lifting of sanctions on Russian crude. Brent and West Texas Intermediate crude futures both fell by approximately 1%.
