Analysis of the Impact of U.S.-Russia Talks on Ukraine Issue on Geopolitical Risk Premium and Defense Industry

On December 20, 2025, the U.S. and Russia held talks on the Ukraine issue in Florida. The market originally expected that diplomatic engagement might reduce the geopolitical risk premium and lower defense demand, but the actual development contradicted this assumption. By tracking the performance of gold (GLD) and defense stocks LMT, RTX, and NOC from December 18 to 22, combined with CNN’s reports on Russia’s attacks on Ukraine during the talks, the following conclusions can be drawn:

1. Changes in Geopolitical Risk Premium
   : As a safe-haven asset, the price of gold rose from $398.57 to $408.23, an increase of approximately 2.4% [0], indicating that market concerns about geopolitical risks continue to rise. CNN reports show that during the talks, Russia launched large-scale attacks on Ukraine, resulting in the death of a 4-year-old child. This incident directly weakened the market’s confidence in the de-escalation of the situation [1].

2. Impact on the Defense Industry
   : Core defense stocks generally rose, with Lockheed Martin (LMT) up 2.8%, Raytheon Technologies (RTX) up 4.1%, and Northrop Grumman (NOC) up 4.5% [0]. Increased trading volume (e.g., LMT reached 2.83 million shares on December 19) reflects the market’s expectation of sustained growth in defense contract demand, especially for orders in missile defense, aerospace, and strategic weapons sectors.

• The risk mitigation effect of diplomatic talks is highly dependent on the synchronized actions of both conflicting parties. This talk failed due to Russia’s attack, highlighting the complexity of geopolitical events.
• The market’s optimistic expectations for the defense industry are not only based on short-term conflicts but also reflect judgments about long-term growth in defense spending, indicating that investors believe the long-term risks of the Ukraine conflict have not changed due to the talks.

• Risks
  : Sustained escalation of geopolitical risks may lead to increased market volatility and further rises in safe-haven asset prices, while the defense industry may face supply chain pressures.
• Opportunities
  : The expected growth in orders for defense enterprises in areas such as missile defense and space systems brings potential opportunities for industry development.

Combining market data and news reports, this U.S.-Russia talk did not achieve the expected risk mitigation; instead, it intensified geopolitical tensions due to Russia’s attack. The rise in gold prices reflects an increase in risk premiums, while the gains in defense stocks indicate enhanced market confidence in the growth of defense demand. Subsequent developments in the talks and changes in the conflict situation need to be continuously monitored.