Moscow escalates bombardment while Washington pursues diplomatic negotiations

A negotiated ceasefire or framework agreement would likely ease energy price volatility tied to transit risk, reduce defense spending uncertainty, and support risk-on sentiment in equities—though the terms and durability of any deal would heavily condition the magnitude of relief.

Continued military escalation alongside stalled diplomatic efforts would plausibly sustain elevated energy and commodity volatility, keep defense budgets elevated, and leave geopolitical risk premia embedded in markets without clear resolution or deterioration.

A meaningful widening of the conflict—whether through expanded Russian strikes, NATO involvement, or destruction of critical infrastructure like gas transit routes—would put upward pressure on energy prices, defense equities, and safe-haven demand while pressuring growth-sensitive sectors and emerging markets.