Market Impact Analysis: Trump-Putin-Zelenskiy Diplomatic Developments

The recent diplomatic engagement between President-elect Trump, President Putin, and President Zelenskiy has triggered distinct market responses across three critical sectors. December 2025 data reveals a

: safe-haven assets (+6.69%) and defense stocks (+6.56%) significantly outperformed the broad market (+1.52%), while energy markets declined (-3.02%) [0]. This suggests markets are pricing in complex scenarios of reduced geopolitical risk (energy), sustained defense spending (defense contractors), and persistent uncertainty (gold).

---

• Oil Fund (USO)
  : $68.48,
  -2.45%
  today,
  -3.02%
  in December 2025 [0]
• Energy Sector (XLE)
  : $44.20,
  -0.38%
  today, worst-performing sector at
  -0.41%
  [0]
• Oil Volatility
  : Elevated at 1.56% daily standard deviation, highest among monitored assets [0]

The

suggests markets are pricing in a . The diplomatic developments—Trump’s “very productive” call with Putin and upcoming meeting with Zelenskiy—signal potential de-escalation pathways. Historically, Russia-Ukraine tensions have supported oil prices through:

1. Supply disruption fears
   from Russian energy infrastructure
2. Sanctions risk
   on Russian oil exports
3. Transit uncertainty
   through Ukrainian pipelines

Current price action implies these risks are being

. Markets anticipate:

• Potential restoration of Russian energy flows to Europe
• Reduced sanction risk if diplomatic progress continues
• Lower urgency for strategic energy stockpiling

• Military escalation
  : Russia continues bombing Kyiv even as talks occur [1], indicating fragile diplomacy
• Supply disruptions
  : OPEC+ production cuts could counterbalance diplomatic optimism
• Technical support
  : USO holding above $68 support level, with December lows at $65.99

• Successful diplomatic resolution
  : Significant reduction in war risk premium
• Demand concerns
  : Global economic slowdown weighing on consumption
• Alternative supplies
  : Non-Russian producers filling gaps

---

• Lockheed Martin (LMT)
  : $483.03,
  -0.56%
  today,
  +6.56%
  in December 2025 [0]
• RTX Corporation
  : $185.17,
  -0.65%
  today [0]
• Northrop Grumman (NOC)
  : $577.37,
  -0.86%
  today [0]
• 2025 Performance
  : Defense stocks gained
  +36%
  (US) and
  +55%
  (Europe) [2]

Despite today’s modest declines, defense stocks showed

, significantly outperforming the broader market. This resilience suggests:

1. Structural, not cyclical, demand
   : European defense spending surged in response to Trump’s approach, with NATO countries increasing commitments [2]
2. “Decentralized deterrence” thesis
   : Analysts cite geopolitical dynamics shifting toward greater policy uncertainty, supporting long-term defense spending [2]
3. Order backlog strength
   : Major contractors have multi-year backlogs less sensitive to immediate diplomatic fluctuations

• European rearmament
  : NATO targets 2% GDP defense spending; many countries accelerating programs
• Technology modernization
  : Air defense, missile systems, and ammunition remain priorities
• Geopolitical uncertainty
  : Even with diplomatic progress, security environment remains elevated
• Valuation support
  : LMT P/E at 26.88x, NOC at 20.79x—reasonable given growth prospects [0]

• Peace dividend scenario
  : Successful conflict resolution could pressure order growth
• Budget constraints
  : Fiscal deficits may limit defense spending increases
• Technical risks
  : Today’s declines may signal profit-taking after strong 2025

---

• Gold ETF (GLD)
  : $416.74,
  +1.17%
  today,
  +6.69%
  in December 2025 [0]
• 52-week high
  : $418.45—approaching all-time highs [0]
• Volatility
  : Moderate at 0.72% daily standard deviation [0]

reveals that despite diplomatic optimism, . This reflects:

1. Diplomatic skepticism
   : Markets question whether Trump’s “carrots for Putin, sticks for Zelensky” strategy can achieve lasting resolution [1]
2. Unpredictability risk
   : Trump’s foreign policy approach creates uncertainty about ultimate outcomes
3. Multi-scenario hedging
   : Investors positioning for various outcomes (no deal, partial deal, escalation)

The

(gold +6.69% vs. S&P 500 +1.52%) indicates:

• Risk hedging
  : Institutions and retail investors seeking protection
• Inflation expectations
  : Gold as store of value amid potential fiscal stimulus from defense/reconstruction spending
• Currency hedge
  : Protection against potential dollar weakness from policy shifts

---

• Energy
  : Bullish for oil demand, bearish for risk premium (net neutral to slightly bearish)
• Defense
  : Moderate bearish pressure on growth stocks, but backlog support limits downside
• Gold
  : Significant correction risk as uncertainty premium dissipates
• Broader Market
  : Bullish for European assets, global trade-sensitive sectors

• Energy
  : Sideways trading with volatility spikes on headlines
• Defense
  : Structural tailwind remains; elevated baseline spending
• Gold
  : Gradual grind higher on persistent uncertainty
• Broader Market
  : Sector rotation; defensives outperform cyclicals

• Energy
  : Sharp rally on supply disruption fears
• Defense
  : Accelerated orders, margin expansion
• Gold
  : Rapid appreciation to new highs
• Broader Market
  : Risk-off rotation, volatility spike

---

:

• Hold
  : Integrated majors with strong balance sheets (dividend support)
• Avoid
  : Pure-play E&P companies highly leveraged to oil prices
• Opportunity
  : Look for entry points if oil tests $65-67 support on USO

:

• Accumulate on weakness
  : LMT, RTX, NOC on 5-10% pullbacks
• Focus
  : Companies with:
  • Diversified product portfolios (missiles, electronics, aeronautics)
  • Strong free cash flow generation
  • European exposure (benefiting from NATO spending)
• Monitor
  : Order backlog trends and congressional appropriations

:

• Core position
  : 5-10% allocation in gold/GLD as portfolio insurance
• Tactical trades
  : Reduce exposure if gold breaks above $420 (overbought risk)
• Alternatives
  : Consider Treasury Inflation-Protected Securities (TIPS) for inflation hedge with lower volatility

---

1. Diplomatic Fragility
   : Russia’s continued bombing of Kyiv despite talks suggests tenuous process [1]
2. Trump’s Leverage
   : Analysis suggests Trump lacks leverage to force Putin compromise in 2026 [1]
3. European Resolve
   : EU’s growing appetite for seizing Russian assets creates hardline dynamics [1]
4. Technical Levels
   :
   • Gold support
     : $400-405 (psychological + 50-day MA)
   • Oil support
     : $65-67 (December lows)
   • Defense support
     : LMT $465-475 (recent consolidation)

---

The Trump-Putin-Zelenskiy diplomatic developments have triggered a

reflecting multiple potential scenarios rather than a single clear outcome. The —gold +6.69%, defense +6.56%, oil -3.02%—reveal market positioning for , even as energy risk premium compresses.

: Continued muddled diplomacy with periodic escalations and de-escalations, maintaining elevated defense spending and safe-haven demand while keeping energy markets volatile.

: Maintain balanced positioning, accumulate defensive assets on weakness, hold core safe-haven exposure, and remain tactical in energy trading. The environment favors and .

---

[0] 金灵API数据 - Real-time quotes, daily price data, sector performance, and volatility metrics for December 2025
[1] Time Magazine - “How Trump’s Power Will Be Checked in 2026” (https://time.com/7340453/trump-2026-look-ahead/)
[2] TechStock² - “Space and Defense Stocks: Rocket Lab, Lockheed, Northrop, RTX in Focus” (https://ts2.tech/en/space-and-defense-stocks-rocket-lab-lockheed-northrop-rtx-in-focus-as-china-sanctions-and-space-force-awards-shape-2026/)
[3] Newsweek - “Canada Announces $1.8B for Ukraine as Zelensky Heads to US to Meet Trump” (https://www.newsweek.com/canada-announces-1-8b-for-ukraine-as-zelensky-heads-to-us-to-meet-trump-11275339)
[4] CNN - “Zelensky and Trump to meet in Florida after weeks of intensive peace talks” (https://www.cnn.com/2025/12/28/politics/zelensky-trump-meeting-peace-plan)