Key takeaways
In the wake of a confrontational meeting at the White House between President Trump, Vice President Vance and Ukrainian President Zelensky, global market uncertainty is on the rise.
Israel and Hamas continue to maintain a cease fire, though it appears fragile.
Increasingly, the U.S. seems to be assuming a more isolationist posture on the world stage.
More than three years after it began, the Russia-Ukraine war is gaining visibility in the Trump administration's early weeks. Most notable is President Donald Trump’s reversal of support that Ukraine received under the previous administration led by President Joe Biden. Trump paused U.S. financial and military support for Ukraine and is pushing both parties to find an agreement to at least pause the conflict. Exemplifying the shifting landscape was a contentious late February 2025 Oval Office meeting between Trump, Vice President J.D. Vance, and Ukrainian President Volodymyr Zelensky, which appeared to pave the way for the Trump administration to consider easing sanctions placed on Russia when Biden occupied the White House. In the meantime, fighting continues, with neither Russia nor Ukraine gaining significant advantage.
However, Trump’s pulling back U.S. support for Ukraine has created international strains. Most of America’s North Atlantic Treaty Organization (NATO) allies remain steadfast in their support for Ukraine against Russia.
“Recent market volatility appears to represent in part a reaction to the White House meeting that went awry,” says Rob Haworth, senior investment strategy director with U.S. Bank Asset Management. “While U.S. stocks suffered a setback, European defense stocks enjoyed a sudden rally.” This comes amid news that several European nations plan to boost defense spending to reduce reliance on U.S. military support.
In the Middle East, a cease-fire between Israel and Hamas took effect on January 19, 2025. It brought at least a temporary halt to a war that’s devastated the Gaza Strip, opening food aid to Palestinians. It also resulted in an exchange of Israeli hostages taken by Hamas in return for Palestinian prisoners held in Israel. However, by early March, the cease-fire appeared to be on shaky ground.
Amid 2025’s changing geopolitical environment, oil prices are easing. In early March, the price of crude oil sits at its lowest level in nearly six months.1
When Russia invaded Ukraine in early 2022, oil prices surged, peaking above $120/barrel. They’ve moderated since. In January 2025, the price of a barrel of West Texas Crude topped $80/barrel before falling below $70/barrel in early March. The potential of the U.S. easing sanctions placed on Russia could allow Russia’s oil supply to flow more smoothly. “Russia may be able to generate more revenue,” says Haworth, “if Russia is allowed to sell at market rates.” Haworth notes that under current sanctions, Russia had limited access to oil markets and was forced to sell oil at below market rates to China and India. “If sanctions are lifted and more Russian oil flows, it could put downward pressure on oil prices.”
“If sanctions are lifted and more Russian oil flows, it could put downward pressure on oil prices.” says Rob Haworth, senior investment strategy director for U.S. Bank Asset Management.
Haworth notes that this dynamic is a contributing factor that may boost global oil production even further. The Organization of Petroleum Exporting Countries (OPEC) previously cut supplies to push prices higher. Haworth thinks OPEC is about to reverse course. “OPEC countries are concerned about clawing back market share they lost when they cut production,” says Haworth.
Natural gas is another global energy consideration. “In contrast to oil markets, natural gas prices are up, driven in part by exacerbated European-Russian tensions,” Says Haworth. Prior to the war, Europe was heavily reliant on Russian natural gas. “Higher natural gas prices could be a more persistent concern for Europe’s economy,” Haworth notes.
Both Russia and Ukraine are major global suppliers of wheat and other agricultural products. This contributed to a temporary spike in agricultural commodity prices in the early weeks following Russia’s invasion of Ukraine in February 2022. Wheat prices, for example, have trended lower in recent months.2
Haworth notes that given the duration of the Russia-Ukraine conflict, commodity markets have generally adjusted to changing conditions. “The only durable negative impact has been on German chemical companies, which are suffering due to the lack of cheap natural gas.”
Europe is likely to feel more impact than is the case domestically. “In the U.S., we’re a bit more insulated from the economic fallout from the conflicts compared to other parts of the world,” says Tom Hainlin, national investment strategist for U.S. Bank Asset Management.
A sudden trade war, prompted by President Trump’s implementation of a new set of tariffs on major trading partners, is another factor potentially affecting commodity prices. “The impact may be most felt on our grain trade,” says Haworth, “with steel and lumber products also affected.”
The investment landscape appeared to change as President Trump assumed office and began implementing significant changes affecting many existing policies and government operations. Increasing global tensions tied to trade tensions and ongoing geopolitical conflicts contributed to investor uncertainty about near-term economic impacts. As a result, markets started the year exhibiting increased volatility. The full impact of these changes is difficult to predict. “Capital markets won’t deal in guesses about what may come,” says Haworth. “They’ll wait for something more concrete.”
Be sure to talk to your financial professional about what steps may be most appropriate for your circumstances.
The most prominent conflicts in the world today are found in two geographic regions. One is Eastern Europe, where Russia and Ukraine have been involved in a war for more than three years following Russia’s invasion of Ukraine. Recent comments and actions by the Trump administration may have altered the landscape of the current battle, as parties for both sides debate ways of pausing or ending the military engagement. The second, more recent conflict, followed a surprise October 2023 attack by Hamas against Israel. In short order, Israel responded with massive bombardments and by sending ground troops into the Gaza Strip. The war’s reach has extended into Lebanon, as Israel seeks to attack a Hezbollah stronghold, and Hezbollah has responded with rocket attacks into Israel. In January 2025, a cease-fire was implemented, though the future direction of the conflict remains uncertain.
To this point, the economic impact of these conflicts were mostly regional in nature. In the immediate aftermath of Russia’s invasion of Ukraine in early 2022, oil prices soared. That reflected efforts by western nations to place economic sanctions on Russia, which is a major oil supplier. However, that price spike was short-lived. Oil prices rose at the start of the Israeli-Hamas conflict, but haven’t spiked to previous levels, and recently dropped below $70/barrel.1 However, changes in the geopolitical landscape may be underway as the Trump administration approaches both the Russia-Ukraine and Israel-Hamas conflicts differently than did the Biden administration. In addition, President Trump has implemented significant new tariffs, reversing decades of generally free global trade, another factor that has the world economy on edge.
Stocks suffered through a bear market in 2022, though much of that was attributed to a changing economic environment. Most notably, the decision by the Federal Reserve to raise short-term interest rates beginning in early 2022 altered the investment landscape. Since late 2022, stocks recovered considerable ground. “The risk of an Israel-Iran conflict does raise greater concerns that Middle East military action could become more widespread,” says Rob Haworth, senior investment strategy director at U.S. Bank Asset Management. However, Haworth notes that the global conflicts currently aren’t having a significant impact on investor sentiment.
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Having reached new record highs more than 50 times in 2024, investors wonder if the S&P 500 is due for a pullback in 2025 as new Trump administration policies fuel market uncertainty.
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