Markets watch Ukraine tensions and US tariff moves

Friday 08 August 2025 - 10:00

Global financial markets turned their attention on Friday to rising geopolitical tensions over the war in Ukraine and the potential implications of U.S. tariffs. Early trading in Europe saw modest gains: Paris rose by 0.30%, London by 0.27%, Milan by 0.23%, and Zurich by 0.31%, while Frankfurt slipped by 0.27%.

Speculation surrounds a possible meeting between former U.S. President Donald Trump and Russian President Vladimir Putin, amid hopes of de-escalating the conflict. Trump reiterated on Thursday that he remains open to discussions with Putin, even if the Russian leader continues to reject direct talks with Ukrainian President Volodymyr Zelensky.

According to market analyst Ipek Ozkardeskaya of Swissquote, hopes for diplomatic progress are lowering the risk premium on assets affected by the conflict, such as oil. Brent crude dropped 0.75% to $65.93, while WTI lost 0.86% to $63.33 early Friday.

While the U.S. tariffs officially came into force on Thursday, investor reaction was subdued. Some countries are still in talks with Washington to lessen the impact of the new duties, which range from 15% to 41%.

In Japan, the Nikkei index closed 1.85% higher, boosted by reassurances that U.S. tariffs would not stack on top of existing ones. Meanwhile, Trump is reportedly pushing for Stephen Miran to join the Federal Reserve and considering Christopher Waller as a replacement for Fed Chair Jerome Powell.

The dollar remains under pressure due to uncertainties around trade policy and expectations of a more dovish Fed stance. As of 7:20 GMT, the euro stood at $1.1654. U.S. bond yields remained stable, suggesting that rate cuts may not immediately translate into lower borrowing costs unless supported by strong credibility.

On the corporate side, SoftBank Group surged 10.39% in Tokyo, buoyed by strong earnings and its investments in AI giant Nvidia. Sony also gained 3.50% after raising its net profit forecast for fiscal 2025–26.