Feb 21 (Reuters) -

Ukraine prepares to mark the third anniversary of Russia's

invasion while U.S. President Donald Trump, in between tariff

threats, pushes for a ceasefire, voters in Germany pick a new

government, and investor faith in AI poster-child Nvidia ( NVDA ) gets a

reality check.

Here's a look at the week in markets from Rae Wee in

Singapore, Lewis Krauskopf in New York and Yoruk Bahceli, Libby

George and Alun John in London.

1/ ON THE EDGE

Three years after Russia launched a full-scale invasion,

Ukraine is at an inflection point.

Investor confidence that a Trump-led ceasefire would boost

Ukraine's economic prospects prompted a stunning rally in its

bonds, with GDP-linked warrants briefly at their highest since

early 2022.

But an equally stunning rhetorical shift has alarmed Europe:

Trump now calls Ukrainian President Volodymyr Zelenskiy a

"dictator" and has cut him out of U.S. talks with Russia aimed

at reaching a peace deal, told Europe it must foot the bill for

Ukraine going forward and demanded compensation for past U.S.

support.

According to the Kiel Institute, donor countries have

provided roughly 80 billion euros ($84 billion) annually since

the war began, with European contributions topping those of the

United States. Ukraine's 2023 GDP stood at roughly $179 billion.

Moscow controls just under a fifth of Ukraine's territory. Any

wavering in U.S. support would hamper Ukraine's ability to

continue fighting.

2/ HIT THE BRAKE

Germany votes on Sunday. Markets are focused on what a new

government will do to boost an economy that has flat-lined after

years of underinvestment.

The question is whether Germany reforms its "debt brake" that

limits its structural budget deficit to just 0.35% of output,

with U.S. tariffs looming and defence spending gaining urgency.

For now, investors reckon any change will be limited.

Conservative leader Friedrich Merz, who is widely expected to

head the next government, has only shown limited openness to

reform.

The risk to watch is whether parties that oppose such a

reform gain enough parliamentary seats to block constitutional

change.

The election is also critical to how Europe finds the hundreds

of billions of euros needed to ramp up its defences as a Ukraine

ceasefire hangs in the balance.

3/ NVIDIA ON DECK

Chipmaker Nvidia reports quarterly results for the

first time since the emergence of DeepSeek's AI model sent

shockwaves through markets. Nvidia ( NVDA ) suffered a record one-day

loss in market value last month over how low-cost DeepSeek might

shake up the AI ecosystem, although shares have since mostly

bounced back. The company's February 26 report will test that

rebound, as well as the market leadership of the "Magnificent 7"

megacaps, which have seen mixed performances so far in 2025, as

other U.S. stock sectors have picked up the slack. On February

28, the release of the personal consumption expenditures price

index will give the latest read on U.S. inflation after a

separate read on consumer prices came in hotter than expected.

4/ TARIFF MAN

Trump will almost definitely make headlines next week with

more threats of tariffs, the question is whether traders will be

listening.

The answer is "not really". State Street found that in November

40% of all equity market volatility could be explained by the

trade war narrative. Now, it is near 2%.

The shift, investors say, is due to perceptions of a growing

gap between what Trump threatens and what he actually does. And

right now, markets have much to process, from Ukraine to

semiconductor chips.

Deals might get done. The EU's trade chief has met top U.S.

trade officials, and Trump says a new deal is possible with

China.

Alternatively, maybe something in the coming week will make

markets really believe the U.S. will follow through on the

tariffs they have threatened on cars, semiconductors and chips,

pharmaceuticals, lumber, and - Trump says - "some other

things".

5/ PRICE PRESSURES

Investors will have their eyes on inflation readings for Japan

and Australia to gauge the outlook for rates in their economies,

with that of Japan being particularly important. The yen

has been on a tear over the past few days on growing

bets for imminent Bank of Japan (BOJ) rate hikes - a view that

is only set to spread should Friday's data show that price

pressures continued to quicken in Japan this month. While the

market currently expects the next BOJ rate rise to come in July

or September, some are betting that a move could come even

sooner should conditions be favourable. BOJ officials have in

recent times also turned more decisively hawkish.

As for Australia, Wednesday's figures could provide the

Reserve Bank of Australia (RBA) with more clarity on its fight

against inflation, after policymakers struck a cautious tone on

the prospect of further easing at their latest policy meeting.

(Compiled by Amanda Cooper; Graphics by Prinz Magtulis, Vineet

Sachdev, Kripa Jayaram and Pasit Kongkunakornkul; Editing by

Hugh Lawson)