Published by Global Banking and Finance Review
Posted on August 19, 2025
By Alun John and Noel Randewich
LONDON/SAN FRANCISCO (Reuters) -Wall Street stocks fell, European equities rose and oil edged down on Tuesday as traders assessed the previous day's White House talks on the war in Ukraine, and looked ahead to a key meeting of central bankers.
U.S. President Donald Trump said he hoped Russia's Vladimir Putin would move forward on ending the war in Ukraine but conceded the Kremlin leader may not want to make a deal.
On Monday, Trump told Ukrainian President Volodymyr Zelenskiy the United States would help guarantee Ukraine's security in any agreement to end Russia's war there, though the extent of any assistance was not immediately clear.
Declines in Nvidia and other heavyweight artificial intelligence stocks pulled the S&P 500 down 0.6% and the Nasdaq down 1.5%. The Dow Jones Industrial Average ended roughly flat after briefly touching an all-time high.
Europe's broad STOXX600 index rose 0.7%, outperforming Asian stocks, which fell slightly.
Europe's gains were capped by declines in defence names, with the STOXX Europe Total Market Aerospace & Defense index down 2.6%, as traders saw the talks as a chance to take profit in the sector after a strong run.
With any breakthrough in talks, "I think European stocks are likely the biggest winners, and within that framework, I think industrial companies, construction for rebuilding materials, and financial companies," said Michael Arone, chief investment strategist at State Street Investment Management.
Losers could include shares in energy and defence after their recent gains, he said.
Energy markets were also assessing the chance of an end of the war in Ukraine, and oil prices fell on speculation that progress in the talks could lead to the lifting of sanctions on Russian crude, boosting supply. [O/R]
The moves were not dramatic though, and some analysts said developments were unlikely to jolt oil and gas markets significantly. Brent crude futures were down 57 cents at 66.06 a barrel, with U.S. crude down 77 cents at $62.65.
EYES ON THE FED
The other main event for markets this week is the Federal Reserve's August 21-23 Jackson Hole symposium, where Chair Jerome Powell is due to speak on the economic outlook and the U.S. central bank's policy framework.
His remarks will be closely watched as the Fed grapples with sticky inflation and signs of slowing growth. Futures markets imply at least two 25 basis point rate cuts this year, reflecting a view that the Fed will not view inflation as a long-term problem.
"There's an anxiety about Powell's comments at Jackson Hole," said Ross Mayfield, investment strategist at Baird Private Wealth Management. "Some investors fear the Fed is going to be a bit behind the curve and higher interest rates have a big impact on growth stocks."
Trump has been pressuring the Fed to cut rates dramatically, and has publicly speculated about replacing Powell before his term ends next year.
"The question is to what degree is the Fed happy to ignore the inflation data because they think it is distorted by tariffs," said Ian Samson, portfolio manager at Fidelity International.
"If you look out one year, you're not going to have Powell as Fed chair, there are a couple of governors to replace, so the balance is clearly going towards people who are willing to look through tariffs, and thus continue to lower interest rates."
Such a scenario would likely bode well for equities, help shorter-dated government bonds, and weigh on the dollar, though the impact for longer-dated bonds is less clear, said Samson, adding that he was largely avoiding the long end of the U.S. yield curve.
The S&P 500 will end 2025 just below current near-record levels, reflecting tempered optimism amid ongoing concerns over the economic impact of Trump's global tariffs and uncertainty surrounding Fed's rate cuts, according to a new Reuters poll.
Longer-dated yields have been rising worldwide in recent months. German and British 30-year yields have tested multi-decade highs, and the latter rose sharply late on Monday. [GB/]
Bond markets were calmer on Tuesday. U.S., German and British government bond yields all fell across their respective curves, with the benchmark 10-year Treasury yield down 3 basis points at 4.31%. [US/] [GVD/EUR]
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, was last up 0.15% on the day. [FRX/]
Gold dipped 0.4% to $3,317.71 an ounce. [GOL/]
(Reporting by Alun John in London, additional reporting by Rocky Swift in Tokyo, Davide Barbuscia in New York and Noel Randewich in San Francisco; Editing by Shri Navaratnam, Kim Coghill, Christina Fincher and Richard Chang)
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