Please see the below article from Brooks Macdonald detailing their discussions on Equity markets and current geopolitical affairs with Trump and Putin. Received this morning 18/03/2025.
What has happened
Equity markets carried over Friday’s bounce for a second day yesterday. Encouragingly, there was a broadening-out across industry sectors – the US S&P500 equity index was up +0.64% but the equal-weighted version was up by more, rising +1.32%, while the pan-European STOXX600 equity index was up +0.79% on the day, all in local currency, price return terms. In commodity markets, Brent crude oil prices are currently up +1.15% this morning at US$71.89 per barrel on Middle East news that Israel has launched a series of airstrikes against Hamas targets in Gaza overnight, ending the two-month long ceasefire.
Geopolitics sees today’s date loaded with symbolism
Russia President Putin and US President Trump are set to hold telephone talks later today, aiming at ending the Russia-Ukraine conflict. Trump has held out hope that there is “a very good chance” for a deal, with the US still pressing Russia to agree to a 30-day ceasefire, while Russia appears to be holding out on a number of conditions to accompany any agreement. For context, today’s date is significant for Russia – loaded with symbolism, 18 March is the annual date that Russia celebrates its 2014 “reunification” with Crimea.
US retail sales data is just about-good-enough
US retail sales data yesterday was just-about-good-enough to assuage investors’ worries that Trump’s trade-tariffs might already be curbing economic activity. While the headline all-items print was a bit disappointing, excluding automobiles, gasoline, building materials and food services, a “control group” core retail sales sub-index was up +1.0% in February month-on-month. That was better than the consensus market forecast which had been looking for a rebound of +0.4% – it also brings the three-month annualised growth of this core retail “control group” to +3.8%.
What does Brooks Macdonald think
Hopes for a successful Russia-Ukraine peace-deal led to a fall in European natural gas prices on Monday, down more than -3% at one point intraday. That price action makes sense – if the war in Ukraine ends, it raises chances that Russia could come back into the western energy-supply mix and help fill European Union (EU) gas reserves which are currently only around 35% full. Falling energy prices could also help to lower broader inflation pressures, a possibility likely not lost on the minds of central bank officials this week as they think about where to set interest rates.
Bloomberg as at 18/03/2025. TR denotes Net Total Return.
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Alex Clare
18/03/2025