Defense shares in Europe soar 7.5% after UK-led talks; Rheinmetall up 12%; BAE Systems climbs 17%
Ukraine’s President Volodymyr Zelensky, Britain’s Prime Minister Keir Starmer and France’s President Emmanuel Macron hold a meeting during a summit at Lancaster House in central London on March 2, 2025. European leaders descended upon London for talks to “drive forward” action on Ukraine, according to the office of UK Prime Minister Keir Starmer.
Justin Tallis | Afp | Getty Images
European markets were in negative territory after opening higher on Monday, despite a charge in defense shares after regional leaders held security talks that touched on bolstered military spending.
The regional Stoxx 600 index was down 0.15% by 8:30 a.m. in London even as the Stoxx Europe aerospace and defense index traded 7.5% higher.
Among the biggest movers were Germany’s Rheinmetall, up 12%, and Britain’s BAE Systems, higher by 17%. Analysts at JP Morgan upgraded their price targets on both companies Monday.
Sweden’s Saab, Italy’s Leonardo and France’s Thales were all more than 10% higher.
Rolls-Royce, a player in defense as well as commercial aerospace which hit an all-time high last week after reinstating its dividend, added another 4%.
British Prime Minister Keir Starmer hosted European leaders over the weekend. During the talks, the U.K. leader said Ukraine’s allies must step up and continue their support, following the explosive meeting between U.S. President Trump and Ukrainian President Volodymyr Zelenskyy on Friday. The U.K. last week committed to increasing its defense spending as a share of GDP over the coming years — a sentiment echoed by other leaders at the summit.
Reuters meanwhile reported Sunday that the parties likely to form the next German government were considering setting up special funds for both defense and infrastructure, with the former potentially unlocking 400 billion euros ($416 billion) in spending.
Robin Winkler, chief Germany economist at Deutsche Bank, said in a Monday note that the move would be “a fiscal regime shift of historic proportions.”
Data releases in focus include preliminary euro zone inflation data for February, with the latest consumer price index coming ahead of a European Central Bank interest rate decision on Thursday.
U.S. stock futures edged up early Monday and Asia-Pacific markets mostly rose overnight as traders awaited more clarity on President Donald Trump’s plans to impose tariffs on key U.S. trading partners this week.
U.S. Commerce Secretary Howard Lutnick reportedly told Fox News on Sunday that the exact tariff that will be levied against Mexico and Canada starting Tuesday is still “fluid,” which means it could be lower than the proposed 25%. He added that the additional 10% duty on China imports is “set.”
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