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Shares in European defence companies extended a blistering rally on Monday as investors raised their bets that governments across the continent will have to boost military spending.
Rheinmetall jumped 18 per cent in Frankfurt, BAE Systems rose 14 per cent in London and Leonardo climbed 15 per cent in Milan.
The sector-wide bounce follows Sunday’s summit of European leaders in London, as the UK and France lead attempts to salvage hopes of a peace deal in Ukraine following President Donald Trump’s explosive row with Volodymyr Zelenskyy in the Oval Office on Friday.
Multiple leaders called for a boost to defence spending after the Trump administration refused to offer US security guarantees, which are widely regarded as a necessary deterrent to any future Russian aggression.
“The events over the last days made it clear to European leaders that they need to raise defence spending significantly going forward,” said Tomasz Wieladek, an analyst at asset manager T Rowe Price.
The Stoxx Europe aerospace and defence index hit record highs last month on expectations that governments will have to shoulder more of the burden for the continent’s security as the Trump administration embarked on the biggest realignment of US foreign policy since the second world war.
This is a developing story
