Shares of European defense companies rose after Trump's statement on Ukraine

Shares of European defense companies soared after US President Donald Trump's statement that Ukraine is capable of regaining all territories occupied by Russia. This is reported by Reuters, writes UNN.

Details

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. The US President had previously suggested that Kyiv should consider ceding territory for peace.

The aerospace and defense index rose 1.1%, approaching record highs and outperforming the pan-European STOXX 600 index, which fell 0.4%. The defense industry index has grown by more than 200% since Russia's war against Ukraine began in February 2022.

The assertion that Ukraine can regain its territories is a notable change from a few weeks ago, when Trump was inclined to make a land deal with Putin without Ukraine's involvement. This in itself is a significant shift in perception and may indicate that the war will drag on and US support for NATO will remain stable. At the same time, rising tensions between NATO and Russia are a clear trigger for the growth of defense stocks.

The line graph shows the change in prices of some European defense stocks since Russia's invasion of Ukraine.

Defense stocks have been a significant factor in the STOXX 600 index's 9% growth this year, setting new records amid the prospect of increased government spending on security in the region.

In June, NATO countries pledged to spend 3.5% of GDP on core defense and 1.5% on broader defense-related measures — a jump of hundreds of billions of dollars annually compared to the current target of 2% of GDP.

The sharp change in US President Trump's position on Ukraine today is activating trading in defense stocks.

As the publication notes, at the same time, there are no signs that Trump's latest statements will be accompanied by a change in US policy, for example, a decision to impose new tough sanctions against Moscow, which Ukrainian President Volodymyr Zelenskyy, who arrived in New York this week, insists on.

Europe's largest defense company by market capitalization, BAE Systems (BAES.L), rose 1.4%. Rheinmetall, Europe's largest ammunition manufacturer, rose approximately 2%.

Saab (SAABb.ST) from Sweden rose approximately 5% to its highest level since mid-July, also amid local media reports that Germany is considering buying its Global Eye reconnaissance aircraft.

Spanish defense and technology company Indra rose approximately 3%. Hensoldt, which supplies sensor systems for Eurofighter, rose 4.6%, and Renk and Italian Leonardo — approximately 3%.

French Thales and Dassault Aviation rose 1.6% and 1.9% respectively.

Recall

Donald Trump stated that Ukraine is capable of winning and regaining all territories with the support of the European Union. Ukrainian defenders de-occupied 360 square kilometers of territory and captured about a thousand prisoners.