The highly anticipated meeting between Donald Trump and Vladimir Putin concluded without any definitive results. Prior to the meeting, European stock markets were experiencing gains, defence stocks were declining, and the Euro was strengthening.
Additionally, oil and gold prices were also decreasing amid hopes for peace or a potential ceasefire. While both leaders aimed to make their discussions fruitful, but it ended up with a short joint press briefing without any deal.
The pressing question now is whether the US President will take action, especially since Putin has rejected the ceasefire. Before the meeting, Trump had warned of “very severe consequences” for Russia. This raises the possibility of increased arms supply to Ukraine and further restrictions on Russian oil exports.
However, President Trump appears to be adopting a more cautious stance, indicating he might postpone any punitive measures against Russia, having suggested a delay in his plans.
He stated, “There is no deal until there is a deal.” Should the situation remain unchanged, China, as a major oil importer from Russia, stands to gain significantly.
Following the nearly three-hour dialogue and a late joint press conference, the full impact of the Trump-Putin discussions on the financial markets will be somewhat clearer today (Monday).
Nevertheless, the overall sentiment appears positive, indicating that this may not be the final opportunity for the two leaders to meet.
Meanwhile, on the economic front, last week, while the US consumer price index (CPI) fell within expected ranges, the Core CPI, a more reliable indicator of inflation trends, increased unexpectedly from 2.9% to 3.1%. Although it excludes food and energy costs, it still reflects the effects of tariffs, which can ripple through the economy. This may help explain the recent spike in the monthly producer price index (PPI) to its highest level in three years. Current data indicates that inflation expectations could remain elevated due to tariff impacts.
The market has fully factored in a 25 basis point rate cut, although the US administration continues to advocate for a more significant reduction.
It is noteworthy that following the release of US economic figures last week, the expectations for a Federal Reserve rate cut have dropped from 94% to 84%. The previous week, those expectations had surged to 100%. Meanwhile, the 10-year US Treasury yields, which were lower earlier in the day, increased by 2.7 basis points to 4.319%, and the 30-year yield rose by 3.8% to 4.921%.
While after the earlier week’s disappointing payroll figures, Trump swiftly nominated E. J. Antoni, considered a conservative economist, as the new head of the Bureau of Labor Statistics, aiming to ensure that future data is accurately reported. While Fed Chairman Jerome Powell’s term concludes in May 2026.
With a 25 basis point cut already factored in and the outcome of the Trump/Putin meeting still uncertain, the financial markets are likely to experience confusion and indecision regarding their future trajectory. This uncertainty might lead to volatility in gold and oil prices to some extent, particularly because China and India have been major buyers of oil from Russia, which is tied to US tariff policies.
Gold prices might fluctuate significantly, as the easing of prices following the Alaska summit was driven by hopes for a positive outcome that ultimately did not materialize.
Some matters have been resolved, such as the absence of tariffs on Swiss gold bars and a 90-day agreement between the US and China to postpone the ongoing trade conflict.
This week, investors and traders will turn their attention to the Jackson Hole gathering, where central bankers are scheduled to speak. Focus will surely be on Federal Reserve Chairman Powell.
Unless there are any surprises, the speakers are expected to adopt a balanced stance.
Thus, in addition to the Jackson Hole meeting, the market will be monitoring US PMI data and the FOMC minutes closely this week.
WEEKLY OUTLOOK — Aug 18-22
GOLD @ $ 3335.50— Gold should hold a support level between $ 3298-03 if it breaks $ 3312-15 to reach $ 3355-58 levels. A break on the upside could lead to a move towards $ 3378 zones. If it doesn’t hold the support level, it may drop to $ 3288.
EURO @ 1.1698— While it may not be the preferred option, Euro must break above the resistance level of 1.1785 to reach 1.1840. If it cannot move past this resistance, it could decline towards the range of 1.1550-60.
GBP @ 1.3552— Pound Sterling is expected to rise and stabilise around 1.3472, aiming for levels between 1.3635-45. If it breaks through this range, it could reach 1.3690. However, if it drops below the support level, it might fall to around 1.3410.
JPY @ 147.20— The support level at 146.25 should remain intact. USD needs to rise above 148.40 to achieve additional gains, which looks tough. Otherwise, the pair might fall to 145.70.
Copyright Business Recorder, 2025