European defense stocks surge after Trump’s Ukraine comments
Photo: Volodymyr Zelenskyy and Donald Trump (Getty Images)
European defense stocks rose sharply after US President Donald Trump said Ukraine was capable of regaining all territories occupied by Russia, Reuters reports.
Trump made the unexpected statement shortly after meeting with Volodymyr Zelenskyy on the sidelines of the UN General Assembly in New York on September 23. Earlier, the American leader had suggested that Kyiv consider ceding land for the sake of peace.
Market reaction
The index of aerospace and defense companies rose 1.1% and approached record highs. Since the start of Russia's war against Ukraine, the defense index has increased by more than 200%.
"On Ukraine winning back its territory seems a notable shift from only a few weeks ago when he was set on doing land deal with Putin without Ukraine," said Neil Wilson, strategist at Saxo Markets.
According to him, tensions between NATO and Russia have also contributed to the growth of defense stocks.
Support for military spending
Defense stocks remain one of the main drivers of the STOXX 600's growth, which has added 9% since the beginning of the year. Investors are betting on growth in government spending on security in Europe.
In June, NATO countries pledged to spend 3.5% of GDP on basic defense and 1.5% on related measures. This implies hundreds of billions of dollars in annual spending, up from the current 2% of GDP.
Defense sector market
"US President Trump's about-face on Ukraine policy is bringing defence stocks into play today," said CMC Markets analyst Jochen Stanzl. Experts also recalled the recent closures of airports in Norway and Denmark due to the threat of drones.
At the same time, there are no signs yet that Trump's position will lead to a change in US policy or new sanctions against Moscow.
Growth leaders
BAE Systems, Europe's largest defense company, rose 1.4%. Rheinmetall shares rose 2%, while Saab shares jumped 5% to their highest level since July.
Spain's Indra added about 3%, Hensoldt 4.6%. Renk and Leonardo shares rose about 3%. Thales and Dassault Aviation shares rose between 1.6% and 1.9%.
US President Donald Trump said that Ukraine could fully restore its territory and then go even further.
Ukrainian President Volodymyr Zelenskyy said he had received positive signals from Donald Trump about support for Ukraine. According to him, the American President will support Ukraine to the end.
