Defence stocks in Europe have surged as investors anticipate increased military spending by governments and allies after the UK and France led an effort to form a peace deal for Ukraine.
Britain’s BAE Systems rose 15% on Monday, while Germany’s Rheinmetall gained 14%, France’s Thales increased 16%, and Italy’s Leonardo also saw a 16% gain. The surge helped push the FTSE 100 index to a new record high.
The moves follow a steep rally in defence stocks as investors expect big increases in defence budgets, driven by fears that the US may withdraw security guarantees. Donald Trump recently stated that Ukraine is not “ready for peace”, sparking concerns and leading to increased demands from European leaders to boost their military spending.
UK Prime Minister Keir Starmer hosted a summit with Ukrainian President Volodymyr Zelenskyy and other leaders in London, aiming to form a peace deal to support Ukraine. The UK plans to raise its defence spending to 2.5% of GDP by 2027, while France’s Emmanuel Macron calls for increased annual defence spending to over 3% of GDP.
Analysts predict that many European countries will soon commit to higher defence spending, driven by the need to counter potential threats from Russia and other nations. The renewed focus on military spending has sent shares in aerospace companies with significant defence revenues rising, including Airbus, Safran, and Rolls-Royce.
Source: https://www.theguardian.com/business/2025/mar/03/european-defence-stocks-surge-as-arms-manufacturers-eye-orders-boom