Russia-US military tensions escalate

What happened: Tensions between Russia and the U.S. escalated recently. President Trump proposed a resource-centric partnership to Putin, who rejected it, reportedly leaving Trump feeling insulted. Russia warned the U.S. against deploying more troops to Poland near its borders, calling it a move towards "suicidal conflict." U.S. intelligence reportedly warned Poland that Russia is considering provocations to test NATO resolve. Despite internal pressure, Putin rebuffed hawks advocating for an attack on NATO. Meanwhile, Trump and Putin had a constructive 90-minute phone call, with Putin inviting Trump to Russia.

Market impact: Energy and defense sectors are affected. Escalating tensions could disrupt energy supplies and drive up defense spending. Companies like ExxonMobil and defense contractors like Lockheed Martin may see increased volatility. Geopolitical risk could also impact Russian equities and currencies, affecting investments in companies like Gazprom and Sberbank.

What to watch next: The U.S. troop deployment to Poland and Russia's response will be crucial. Additionally, watch for any further developments in U.S.-Russia diplomatic relations following their constructive phone call. Lastly, monitor energy and defense sector earnings to gauge the impact of geopolitical tensions on these industries.