Financial markets are clearly in a wait-and-see mode today, awaiting the outcome of talks between US Special Envoy Steven Witkoff and Vladimir Putin, with any rumours of progress in the negotiations quickly translating into movements in the euro, European indices and the industrial and defence sector. Investors are discounting the growing likelihood of even a framework agreement or a lasting ceasefire, treating it as a potential game-changer for risk premiums in Europe.
At the same time, the very fact that the market is increasingly pricing in a more optimistic resolution to the conflict is acting as a brake on the share prices of European defence companies. After months in which the defence sector benefited from record orders and increased security spending, the recent wave of headlines about peace plans has triggered profit-taking and a correction in industry indices, even though there is still no sign of a lasting breakthrough on the battlefield.
What can we expect from today's talks?
Two possible paths can be considered. Firstly, Putin may take a stand against President Donald Trump's peace plan. The immediate market reaction would be the opposite of what we saw last week, i.e. a rebound in the euro, frontline currencies, including the Polish zloty, and growth in the broader European market, with the exception of raw materials, industrial and defence companies. Alternatively, Putin could signal his willingness to negotiate. At first glance, this is positive news, but not necessarily. Putin has an incentive to enter into talks without immediately agreeing to the terms of the agreement. Given that Ukraine has already shown a willingness to enter into talks, Russia has an interest in dragging out the negotiations in order to obtain greater concessions.
Let us also remember that even the 30-day partial ceasefire agreement reached in March was broken almost immediately. Therefore, even a peace agreement agreed upon by all parties may not survive the final test.
Shares in German defence giant Rheinmetall (RHM.DE) are losing ground during today's session and remain below the 200-day exponential moving average (gold curve on the chart). Interestingly, this technical level has not been tested by the market since November 2024. Source: xStation
DE40: DAX gains on Tuesday 📈 Bayer surges 10% on unexpected US administration support
BREAKING: EURUSD with limited reaction to near-consensus CPI data from the eurozone 🔎
Chart of the day - Bitcoin (02.12.2025)
Morning wrap (02.12.2025)
The content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.
