Stocks waved on hopes & doubts of an imminent Ukraine war ceasefire

·       Wall Street stumbled on an unprecedented live heated exchange of words at the Oval Office (WH) between Zelenskyy and Trump-Vance but recovered late hours

·       Gold and oil stumbled, but closed off the low; USD and US bonds gained

·       Trump’s conciliatory post in Truth urging Zelenskyy to come again for a deal, when he is ready for peace kept hope of a Ukraine war ceasefire and Wall Street recovered

Wall Street Futures crumbled in the last few days on Trump trade war tantrum, but were also getting some support on hopes & hypes of an imminent Ukraine war ceasefire after the Rare Earth Materials agreement was reportedly almost finalized between the US and Ukraine, while also keeping European leaders in loop. But on Thursday, the market slid on the wrong foot as Trump indicated Canada/Mexico tariffs of 25% will be effective from 4th March instead of an earlier assumption on 2nd April.

Wall Street was also dragged by Trump’s tech war stance; Despite an upbeat report card, NVIDIA stumbled on Trump’s potential AI chip export restriction to China. Also softer US GDP growth and hotter-than-expected initial jobless claims (after mass firings of Federal employees by Trump & Musk) - dragged the market sentiment as the market is now concerned about an imminent stagflation.

On early Friday, Wall Street Futures recovered on hopes of imminent or significant progress in the Gaza war ceasefire as US President Trump was set to meet his Ukraine counterpart Zelenskyy in a positive mindset after the recent war of words. The market was almost sure about a positive outcome in the meeting over the Ukraine war ceasefire and the Mineral agreement between the US and Ukraine. Gold also slid on the progress of an imminent Ukraine war ceasefire; oil is also under pressure despite OPEC not increasing production from April due to the Trump trade war and policy tantrums.

On Friday, the US core PCE inflation data was largely in line with market expectations and eased to 2.6% in January’25 from 2.9% sequentially, the 3MRA was still around 2.8%, substantially above 1.6% Fed target (pre-COVID levels ~2.0% core inflation-PCE+CPI average). Also, the sequential core PCE rate was 0.4% in January’25, vs 0.2% in the previous month and above 0.3% market consensus. The 3MRA of US core PCE sequential (m/m) was around 0.3% in Jan’25 against the 0.1% required run rate for the Fed’s effective target of 1.6%. Thus after core PCE inflation data Friday, Gold slips to some extent on fading hopes of any Fed rate cut before June or even September’25. Also hopes of an imminent Gaza war ceasefire undercuts Gold, while buoying Wall Street Futures.

On Friday (28th Feb’25), the contentious meeting between U.S. President Trump and Ukrainian President Zelenskyy impacted discussions of a potential ceasefire in the coming days. Late Friday, Wall Street Futures slid on fading hopes of an imminent Gaza war ceasefire amid an unprecedented heated war of words between Ukraine’s President Zelenskyy and Trump-Vance (US President –VP) in the Oval Office (WH) in front of live cameras. Zelenskyy was not ready to accept any unilateral ceasefire brokered by the US (Trump admin) without active participation or involvement of Ukraine and Europe. And Zelenskyy may not accept any ceasefire agreement with Russia without an active security guarantee by Europe/EU and also the US as the last backstop.

On the other side, Trump is not ready to extend any official US security guarantee to Ukraine to avert any future Russian aggression, but he may provide assurances that under his Presidency or even any future Republican President like Vance, Russia (under Putin) will not attack again Ukraine. Eventually, after a heated exchange of words about the Ukraine war and Ukraine’s potential to fight it out against ‘mighty’ Russia without any active US/NATO assistance, Zelenskyy was almost ‘kicked out’ of the White House. But in the whole process, Zelenskyy was able to play the victim card very efficiently and was also able to gain ‘unconditional support from almost all other Democratic leaders of the world overwhelmingly led by Europe and APC against ‘autocrat’ Trump, now the ‘best-trusted friend of Dictator Putin’.

Trump-Zelenskyy White House Meeting

On Friday, February 28, 2025, President Zelenskyy visited the White House to discuss U.S. support for Ukraine amid its ongoing conflict with Russia. The meeting, initially cordial, deteriorated into a heated exchange. President Trump and Vice President Vance criticized Zelenskyy for his perceived lack of gratitude towards U.S. aid and urged him to pursue peace negotiations with Russia. Trump warned that continued U.S. support hinged on Ukraine's willingness to seek peace, stating, "That was not a man that wanted to make peace. I want a ceasefire now."

The confrontation led to the cancellation of a planned minerals deal and a joint press conference. Following the meeting, Zelenskyy expressed uncertainty about any wrongdoing on Ukraine's part but remained hopeful about mending relations with the U.S. He emphasized Ukraine's need for concrete security guarantees against future aggression before engaging in peace talks.

Heated Exchange of Words: The meeting between Trump and Zelenskyy ended abruptly after a heated exchange over the path to a ceasefire in Ukraine. Trump pushed for an immediate ceasefire, while Zelenskyy insisted on security guarantees.

Tense Atmosphere: The meeting was marked by tension, with Trump accusing Zelenskyy of prolonging the conflict and Zelenskyy refusing to compromise with Russia without guarantees. Trump and Vance blamed Zelenskyy to ‘gamble’ with WW-III.

Diplomatic Fallout: The planned signing of a U.S.-Ukraine deal on rare earth minerals and a joint press conference was canceled following the tense & heated exchange of words.

Ukraine War Ceasefire Prospects

The strained U.S.-Ukraine relations have cast uncertainty over potential ceasefire negotiations. While President Trump has called for an immediate ceasefire, Zelenskyy seeks iron-clad peace agreements that include robust security guarantees to prevent future conflicts. European nations are discussing deploying a peacekeeping force to Ukraine, but U.S. support for this initiative remains unclear.

Some geo-political analysts also cautioned that a hasty ceasefire without addressing underlying issues could merely serve as a pause, allowing Russia to regroup and potentially reignite hostilities later. In summary, the recent discord between the U.S. and Ukraine has complicated efforts toward achieving a sustainable ceasefire.

Ceasefire Disagreements: The latest developments in the Ukraine-Russia conflict show no signs of an immediate ceasefire. Ukrainian President Zelenskyy has consistently refused to accept a ceasefire without robust security guarantees, fearing it could embolden Russia to rearm and reignite the conflict. Zelenskyy also pointed out continued Russian Aggression even on Friday, using ballistic missiles despite Putin being well aware of the WH meeting on Ukraine war ceasefire initiatives. Russia continues to launch attacks on Ukraine, with recent drone strikes targeting Odesa and Kharkiv, resulting in casualties and damage.

Global Reaction: The confrontation has sparked concern globally, with many leaders expressing support for Ukraine's stance and criticizing Trump's approach European leaders have voiced strong support for Ukraine, condemning Trump's treatment of Zelenskyy and reaffirming their commitment to Ukrainian sovereignty. Despite tensions with the U.S., Ukraine continues to receive support from other global leaders, emphasizing the need for a negotiated peace with security assurances.

Overall, the situation remains volatile, with no clear path to a ceasefire, and heightened diplomatic tensions between the U.S. and Ukraine after the White House meeting reflect a significant escalation in tensions and a breakdown in diplomatic efforts. On Friday, February 28, 2025, a highly anticipated meeting in the WH Oval Office between Trump and Zelenskyy turned into a public confrontation, derailing hopes for a ceasefire framework and a minerals deal that had been under discussion. The meeting intended to smooth relations and advance a U.S.-Ukraine economic partnership involving Ukraine's critical raw material deposits, instead devolved into a shouting match live broadcast before the whole world.

Key Points of Contention: US President Trump, alongside VP Vance, pressed Zelenskyy to accept a deal with Russia or risk losing U.S. support, accusing him of being "disrespectful" and "gambling with World War III." Trump emphasized an immediate ceasefire, stating, "I want it to end immediately," and suggested Zelenskyy was not in a strong negotiating position, saying, "You don’t have the cards." Zelenskyy countered that a simple ceasefire without security guarantees was insufficient; citing Russian President Putin’s history of breaking agreements, noting Putin had "broken his signature" 25 times. He urged Trump not to "compromise with a killer and terrorist”.

Outcome: The meeting ended abruptly with no minerals deal signed, a planned joint press conference canceled, and Zelenskyy reportedly asked to leave the White House. Trump later posted on Truth Social, claiming Zelenskyy "disrespected the United States" and was "not ready for peace" if America was involved, adding, "He can come back when he is ready for Peace."

Later Trump also mocked Zelenskyy, calling him a "big shot" as he departed for a Florida MAGA event. Zelenskyy, in a subsequent Fox News interview, expressed hope that the relationship with Trump could be salvaged but stressed Ukraine’s need for U.S. support and security guarantees, saying, "We just want to hear that America is on our side and not with Russia." He denied owing Trump an apology, emphasizing gratitude to the American people while defending his stance.

Ceasefire Developments The ceasefire discussions have been complicated by this unprecedented public war of words among the Presidents of the two countries.

Trump’s Position: Trump has consistently pushed for an immediate end to the war, without even a formal agreement, claiming he trusts Putin to negotiate in good faith. He has suggested a framework tying peace to economic deals, such as sharing Ukraine’s mineral resources, but has threatened to withdraw U.S. military aid if Zelenskyy does not comply. High-level administration sources confirmed ongoing debates about future U.S. aid following the Oval Office incident.

Zelenskyy’s Stance: Zelenskyy insists on a formal agreement of ceasefire for "just and lasting peace" with robust security guarantees, arguing that a ceasefire alone would allow Russia to regroup and strike again. He has challenged Trump’s softer approach to Putin, highlighting Russia’s role as the aggressor.

Broader Context: Recent U.S.-Russia talks in Saudi Arabia, excluding Ukraine, have further strained relations. Trump’s administration has engaged with Russian negotiators, with Trump stating Putin wants the war to end. However, Zelenskyy’s exclusion from these discussions has fueled his accusations of U.S. bias toward Russia.

Current Sentiment and Implications

U.S. Reactions: Democratic lawmakers condemned Trump and Vance’s treatment of Zelenskyy as "shameful," while some Republicans, like Senator Lindsey Graham, called for Zelenskyy’s resignation. Secretary of State Marco Rubio questioned Zelenskyy’s commitment to peace and suggested an apology was warranted.

International Response: European leaders and Canada expressed support for Zelenskyy, but doubts persist about their ability to propose a viable peace plan without U.S. backing. Russian officials reacted with glee to the White House fallout, while Ukraine’s allies in Europe prepare to meet Zelenskyy in London on March 2, 2025, to discuss the next steps.

Ongoing Conflict: Amidst this diplomatic chaos, Russia launched drone attacks on Ukraine overnight on February 28, hitting civilian targets in Kharkiv and Odesa, underscoring the war’s persistence despite ceasefire talks.

Conclusions:

The Trump-Zelenskyy clash has left Ukraine’s Western support in jeopardy at a critical juncture, with no immediate resolution in sight. The war of words continues to overshadow ceasefire efforts, with both leaders entrenched in their positions. Also, NATO unity may be at stake and Trump may even announce an exit of the US from NATO as Trump is insisting Europe is not paying adequately and Ukraine is an issue of Europe, not the US; there is a big ocean between the US and Ukraine.

The contentious meeting caps weeks of tenuous relations between the US and Ukraine. Before Trump’s return to office in January, the US had been a staunch supporter of Ukraine’s war effort since Russia’s full-scale invasion began three years ago. But U.S.-Ukraine ties have devolved as Trump has moved closer to Russia, echoing the Kremlin’s talking points on Ukraine and seemingly offering Russian President Putin major concessions without involving Kyiv.

On Friday (28th Feb 25), the Zelenskyy-Trump meeting was initially quite cordial despite underlying tensions. But after the initial diplomatic opening remarks by both leaders, it turned chaotic soon after the Q&A session began and Zelenskyy indicated he couldn’t agree to Trump’s proposal for an instant ceasefire without a formal agreement along with the guarantee for US security. Further, Zelenskyy was intimated and humiliated by a reporter mocking his informal army trousers instead of formal suits at the White House.

At some point in the conversation, a Polish-American journalist asked Trump whether he is too aligned with Russia/Putin now in contrast with earlier US foreign policies, Trump was trying to defend himself; but VP Vance interfered at this point, which eventually made Zelenskyy on Russia, Putin and diplomacy. Eventually, Trump erupted when Zelenskyy accused Vance of talking ‘loudly’ and also suggested Trump feel about any war at home ground in the future. Trump then demanded Zelenskyy accept an instant ceasefire at the face value of his assurances and it’s the US that will fix Ukraine’s future as the principal creditor. Trump also tried to justify his stance about Putin, which is practical, considering the overall situation and not for any so-called Russiagate playboy gossip.

Despite the chaotic White House Oval Office meeting, both Trump and Zelenskyy may reconcile in the coming days, considering domestic and geo-political compulsions for both. Although both Trump and Zelenskyy are playing the nationalistic card and as usual, Zelenskyy is also playing his ‘victim’ card, Trump is a tough businessman and a great deal-maker. Thus Zelenskyy will not get any aid from Trump by playing his victim card. This is in contrast with Biden. But at the end of the day, Ukraine has become a political issue for the last few years for not only Europe, but also for the US, but the situation has now changed as the general public is now worried more about the economy and standard of living rather than Ukraine.

Now after three years of this endless war and billions of dollars in aid, the US (under Trump) is not willing to sponsor this meaningless war for more and Trump is making a business deal with both Putin and Zelenskyy for the rare earth minerals deals. Both the US and Russia may control around 50% of Ukraine’s untapped reserve of rare earth materials after the Ukraine war. The control of Ukraine’s untapped $23T rare earth materials may be the main reason behind the Ukraine proxy war between Russia/China and US/EU/NATO. Russia is now already controlling almost 50% of lands in the eastern and southern Ukraine, rich in rare earth materials deposits. As part of the deal, Russia and the U.S. may also develop jointly these rare earth materials without even Chinese help to reduce China’s global dominance in this critical sector.

A Statement from President Donald J. Trump

“We had a very meaningful meeting in the White House today. Much was learned that could never be understood without conversation under such fire and pressure. It’s amazing what comes out through emotion, and I have determined that President Zelenskyy is not ready for Peace if America is involved, because he feels our involvement gives him a big advantage in negotiations. I don’t want an advantage, I want PEACE. He disrespected the United States of America in its cherished Oval Office. He can come back when he is ready for Peace.”

Trump also expressed his sympathy for Zelenskyy, considering his emotions. Trump acknowledged that both sides learned many issues from such a fiery exchange of words and disrespect of the White House and America by Zelenskyy.

Bottom line:

Both Trump and Zelenskyy need each other to end the Ukraine war and thus, both need to reconcile in the coming days irrespective of any narratives.

Market impact:

On Friday, Wall Street Futures stumbled on fading hopes of an imminent Gaza war ceasefire after Trump-Zelenskyy-Vance war of words and the unceremonious exit of Zelenskyy team from the White House. But Wall Street Futures also recovered after Trump’s Truth post, which sounds conciliatory as Trump offered Zelenskyy another opportunity to come back for a ceasefire deal when he is ready for peace.

On Friday, Wall Street eventually closed in deep green, with the S&P 500 and Nasdaq-100 adding 1.6% each, while the Dow Jones (DJ-30) gained almost 600 points, led by NVIDIA’s recovery from Thursday’s plunge. Aso Tesla surged, snapping six consecutive days of losses amid concerns over CEO Musk’s political and austerity stance affecting sales. But overall, the S&P 500 and Nasdaq posted their worst monthly declines since April 2024 and September 2023, respectively, down 1.4% and 4%, while the Dow lost 2.2% amid Trump tantrum 2.0 in his first 30 days.

On Friday, Wall Street was boosted by all major sectors led by banks & financials, consumer discretionary, techs, energy, utilities, communication services, industrials, consumer staples, consumer staples, healthcare, materials and real estate. Dow Jones (DJ-30) WAS BOOSTED BY Nvidia, 3m, Goldman Sachs, American Express, Walt Disney, JPM, Visa and Apple, while dragged by Nike, McDonald’s, Verizon and IBM.

On Friday, Gold slumped almost -0.65% and closed around $2857 after making a low around $2832. Gold tumbled over 100 points from 2956 and suffered the biggest weekly drop since November 24 on reducing geopolitical tensions, increasing Trump trade war tantrums, and fading hopes of more than two Fed rate cuts in 2024; USD gained. Oil also lost ground for the week.

Weekly-Technical trading levels: DJ-30, NQ-100, and Gold 

Looking ahead, whatever the fundamental narrative, technically Dow Future (CMP: 43850) now has to sustain over 44050 for any further rally to 44250/44400-44500/44800 and 45000/45200-45300/45500 and 45700/45800-45900/46000 in the coming days; otherwise sustaining below 44000, DJ-30 may again fall to 43800/43675-43300/43150 and 42800/42700-42000/41900 in the coming days.

Similarly, NQ-100 Future (20915) has to sustain over 21050 for a further rally to 21300/21500-21700/21850 and 22050/22200-22350/22500 and 22700/23000-23300/23500 in the coming days; otherwise, sustaining below 21000, NQ-100 may again fall to 20900/20600-20400/20150 in the coming days.

Also, technically Gold (CMP: 2855) has to sustain over 2830 for a further rally to 2870/2905-2925/2955 and 2965/2975-3000/3025 and 3050/3075; otherwise sustaining below 2825 may further fall to 2810/2795-2780/2765 and 2745/2725-2695/2665 and further 2635/2600-2585/2560 in the coming days.