HG MARKETS: 

European defense shares climbed on Friday as European leaders met in Brussels to reaffirm their support for Ukrainian President Volodymyr Zelenskiy. Meanwhile, President Donald Trump intensified his criticism of Kyiv, raising concerns about the future of U.S. military assistance and intelligence-sharing with Ukraine.

Trump accused Ukraine’s attacks on Russian oil refineries of driving global energy prices higher, warning that rising fuel costs could become a political liability ahead of the U.S. midterm elections in November. His remarks followed renewed tensions over an agreement to halt attacks on energy infrastructure, after Ukraine resumed strikes on a refinery near Moscow.

Meanwhile, Washington is reportedly considering easing sanctions on vessels transporting Russian oil, potentially affecting global energy supply and crude prices. European allies remain concerned that reduced U.S. support could leave Ukraine more vulnerable, particularly as Kyiv faces significant funding shortfalls and growing demand for air defense systems and winter energy assistance.

Ukraine’s finance minister estimates that the country faces a $32.6 billion budget deficit next year, excluding substantial military aid requirements. European leaders have also expressed frustration over limited new financial commitments, although additional military assistance may be announced soon.

The conflict continues to damage critical infrastructure. Russian drone attacks killed three people in Kharkiv and disrupted electricity supplies in western Ukraine, while emergency power cuts were introduced in Kyiv. Separately, Russia placed certain European companies’ local assets under temporary management in retaliation for EU support of Ukraine.

Market takeaway: Uncertainty surrounding U.S. military support, potential changes to Russian oil sanctions, and continued attacks on energy infrastructure could increase volatility in crude oil prices, European defense stocks, and broader