European Aerospace & Defence Stocks Rally Amid Calls for Higher Military Spending

European aerospace and defence stocks surged on Monday as political leaders across the region called for an emergency summit on the Ukraine war, following growing U.S. pressure to boost military spending.

Stock Market Performance (as of 08:20 GMT):

• Rheinmetall (Germany): +8.3%
• Saab AB (Sweden): +7.1%
• BAE Systems (UK): +6.5%
• Leonardo (Italy): +5.4%
• Thales (France): +4.3%

These gains lifted the STOXX Aerospace & Defence Index +2.7%, reaching an all-time high.

Key Market Drivers

1. Increased Military Spending Calls
   • U.S. officials are pressuring NATO allies to increase defence budgets amid ongoing geopolitical tensions.
   • The European Union’s top leaders have called for an emergency summit to discuss the Ukraine war and long-term security commitments.
2. Defence Industry Growth Since Ukraine War
   • Since Russia’s invasion of Ukraine three years ago, the STOXX Aerospace & Defence Index has more than doubled in value.
   • Governments across Europe and NATO have significantly boosted military budgets, benefiting defence contractors.
3. Broader Market Sentiment
   • The wider STOXX 600 index was up 0.2%, reflecting a muted broader market as investors focus on geopolitical risks and defence-related tailwinds.

Market Implications

• Defence stocks remain a key growth sector as geopolitical uncertainties drive long-term military investment.
• Investors will closely watch policy decisions from the upcoming European emergency summit and any NATO spending commitments.
• If military budgets continue rising, defence stocks could see further upside in the coming months.