Markets cashed in on the war in Ukraine but may | Money News

• While European markets benefited from the Ukraine war, analysts consider peace may increase the euro and shares even more. Lingering mistrust of Russia means Europe is unlikely to cut protection spending after any ceasefire. NATO’s new dedication to five% of GDP for protection means navy investment will proceed regardless of peace talks, analysts at Macquarie say.

President Trump meets Russia’s Vladimir Putin in Alaska later this week to debate the chance of a ceasefire or a peace deal in Russia’s invasion of Ukraine.

Politically, Trump would very very like to assert credit for ending the battle on Europe’s Eastern border. Unfortunately, Russia has damaged 190 totally different “offers” over Ukraine since 1994, and 25 of these had been since 2014. So there’s each probability that a “deal” may be introduced, adopted by a resumption of hostilities by Moscow.

For buyers in Europe, this may be no unhealthy factor, in keeping with Macquarie analysts Thierry Wizman and Gareth Berry. The euro may rally towards the greenback, they predict, as it’s unlikely that Europe will roll back protection spending just because Putin indicators one other piece of paper.

And, they be aware, European shares have accomplished properly this yr, boosted by a huge navy spending package deal from NATO nations that commits all European allies to commit 5% of their GDP to protection.

“The prospect of European growth and re-inflation may have also been boosted by the war, since the conflict energized new commitments to increase defense expenditure and associated infrastructure expenditure in Europe. Notably, the June 2025 NATO summit saw a formalization of the plan to get each country to spending the equivalent of 5% of GDP on defense by 2035,” they write. “The ramp up is steeper than in the U.S.”

The scale of Europe’s return to navy spending is under-appreciated, in keeping with an evaluation of satellite tv for pc imagery carried out by the Financial Times. More than seven million sq. meters of new navy manufacturing services have been added in Europe since 2022, at 150 websites throughout 37 firms.

After the Cold War ended in 1989, Europe decreased its protection spending to get pleasure from a “peace dividend.” Might that not occur again, if Putin freezes his motion in Eastern Ukraine? Unlikely, the Macquarie staff says, as a result of no one in Europe believes that Putin is prone to disarm or keep away from future navy engagements.

“A review of what analysts have written about this topic leans us strongly toward the view that the EU and NATO would not roll back commitments toward higher defense spending if some form of ‘peace’ came to Russia and Ukraine. Even with a peace agreement or cease-fire, the long-term implications of Russia’s actions and the potential for future conflict could lead the EU to maintain or increase defense spending to ensure long-term security and deter potential aggression later,” they wrote.

This story was initially featured on Fortune.com