US, Russian Officials Begin Ukraine Peace Talks: Defense Sector Stocks Rise

Officials from the United States and Russia held peace talks on Tuesday without the presence of Ukrainian or European officials. 

The Details: U.S. officials led by Secretary of State Marco Rubio met with Russian officials led by Foreign Minister Sergey Lavrov in Saudi Arabia to begin discussions to end the war in Ukraine. 

The talks between the groups are also intended as "trust-building" and could lay the groundwork for a future meeting between President Donald Trump and Russian President Vladimir Putin.

Ukrainian President Volodymyr Zelenskyy has said his country would not accept a peace deal negotiated without Ukrainian involvement, though Trump has vowed that Ukraine will be involved in the process.

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There were no European representatives present at Tuesday's talks. However, according to the Financial Times, the U.S. State Department sent written requests last week asking European governments to outline their potential contributions to a peace deal—ranging from weaponry to peacekeeping forces and security arrangements for Ukraine.

Expert Ideas: Experts are predicting increased defense spending after French President Emmanuel Macron invited European leaders to a security summit on Monday, ahead of Tuesday's talks between Russia and the U.S. 

"The emergency defense summit in Paris on Monday on the eve of negotiations over the war in Ukraine strongly implies that a large increase in defense spending among European Union nations is coming,"  said Joseph Brusuelas, chief economist at RSM. 

Bloomberg reported that defense spending could increase by as much as $3.1 trillion over the next ten years, Brusuelas noted. Stocks in the defense sector are reacting positively to the latest geopolitical developments. 

Stocks To Watch: Shares of RTX Corp. RTX and Lockheed Martin Corp. LMT, the largest defense contractor in the U.S., are climbing Tuesday as investors anticipate potential orders and contracts related to increased spending from European nations. 

Investors can monitor the broader defense sector through the iShares U.S. Aerospace & Defense ETF ITA which tracks the Dow Jones US Select Aerospace & Defense Index and the Global X Funds Global X Defense Tech ETF SHLD, which offers exposure to both developed and emerging market companies in the defense technology sector.

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