European defence stocks rise sharply amid growing threats in the region
European defence companies recorded strong gains on Monday, 16 February, as investors expect security spending to increase due to increased threats.
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According to the Financial Times, Rheinmetall shares rose 6% on the Frankfurt Stock Exchange, BAE Systems shares rose 5% in London, and French Thales added 3.8%. The Stoxx Europe aerospace and defence index reached its highest level since the 1990s.
The increased interest in defence stocks coincided with a meeting of European leaders in Paris, where they discussed the possible consequences of Donald Trump's announcement that he intends to start talks with Vladimir Putin to end the war in Ukraine.
Jim Reid, a strategist at Deutsche Bank, said that recent developments could be a "big catalyst" for increased defence spending in Europe.
European leaders are increasingly emphasising the need to strengthen defence capabilities. UK Prime Minister Keir Starmer has proposed deploying additional troops to Europe and promised a gradual increase in defence spending to 2.5% of GDP. Meanwhile, Rheinmetall CEO Armin Papperger told Reuters that the company will grow faster than expected.
Source: Financial Times
