What impact will Ukraine talks have on European stocks?

Anticipation surrounding Ukraine peace talks

European indices closed mostly lower overnight as investors took a cautious stance ahead of Friday’s critical Ukraine ceasefire talks between United States (US) President Donald Trump and Russian President Vladimir Putin.

A successful resolution to the Russia-Ukraine conflict could propel European stock markets higher, building on gains already driven by ceasefire optimism.

Impact of potential ceasefire

A ceasefire could reduce ​natural gas prices by 15% to 50% if Russian supplies resume, boosting energy-intensive sectors like chemicals while opening opportunities for reconstruction in Ukraine. This could benefit industrial firms like Siemens andSchneider Electric.

However, defence stocks such as Rheinmetall and Saab may face headwinds due to reduced military spending expectations.

UK economic outlook amid BoE decisions

While Europe’s economic data calendar is relatively light this week, the United Kingdom (UK) takes centre stage with key releases on gross domestic product (GDP) and employment, following the Bank of England’s (BoE) 25 basis point (bp) interest rate cut to 4% last week. The BoE’s rate cut, accompanied by a 5:4 vote split and forward guidance emphasising data dependency, was more hawkish than anticipated.

This has tempered expectations for immediate BoE rate cuts, with markets pricing only a 10% chance of a September cut but an 80% likelihood of a 25 bp reduction to 3.75% in December.

GDP Q2 Prelim

Date: Thursday, 14 August at 4.00pm AEST

Following first-quarter (Q1) 2025 growth of 0.7%, the strongest in a year. The market expects a slowdown to 0.1% in the second quarter (Q2). The slowdown is attributed to headwinds from higher National Insurance contributions, persistent inflation, and uncertainty around US tariffs, which dampened export orders and business sentiment.

Services, which account for roughly 80% of UK GDP, are expected to remain the primary growth driver, though retail and hospitality may see softer performance due to weaker consumer spending.

UK GDP quarterly growth rate chart

FTSE technical analysis

From its record high of 8908 in March, the FTSE 100 fell 1364 points to a low of 7544 in early April, before completing its remarkable recovery and pushing to a fresh record high of 9190 into the end of last month.

Since that point, the FTSE has spent the opening weeks of August consolidating its gains above 9000, working off overbought readings, with just a touch of bearish divergence evident on the relative strength index (RSI) indicator.

Looking ahead, a break above 9200 could see the FTSE head towards the next upside target at 9350 to 9400. Conversely, a break below the support at 9000ish would likely see a pullback initially towards support at 8900 coming from the highs of March and June, with a break below there then opening the way for a deeper decline towards support at 8750 to 8700.

FTSE daily chart

DAX technical analysis

In mid-May, the Germany 40 (DAX) burst above the double top at 23,746ish from March this year before hitting a record high of 24,639 in mid-July.

After spending a few weeks consolidating its gain between 24,500 and 23,900, it dipped to 23,380 before bouncing from support provided by the double top from earlier this year at the 23,450 area.

A sustained break of support around the 23,380 area would open the way for a deeper decline back to the June low at 23,051.

On the upside, a move above resistance at 24,550 to 24,650 would signal renewed bullish momentum with the potential to push higher towards the next upside level at 25,000.

DAX daily chart

• _{Source: TradingView. The figures stated are as of 12 August 2025. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.}