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The shares of European defense companies reached record highs on Monday, as investors bet on the fact that governments have to carry more of the strain on the safety of the continent by increasing military expenditure.
Rheinmetall rose by 9.9 percent in Frankfurt, while the BAE systems in London rose by 7.3 percent and Thales rose by 7 percent in Paris. The Stoxx Europe Air and space travel and defense The index has reached its highest level for at least the early nineties.
The sector-wide rash comes when the European leaders gather in Paris to find out how they can react to US President Donald Trump Decision to start talks with Russia’s Vladimir Putin to end the war in Ukraine.
The prospect of European countries that played a role in a security solution for Ukraine were strengthened as part of a broad increase in the region’s defense spending in a security solution for Ukraine.
For European geopolitics it was a “big last day” and “maybe we will sit as a large catalyst for higher European defense spending,” said Jim Reid, strategist at Deutsche Bank.
“There are apparently more urgency to increase defense spending, and that seems to increase European leaders,” he added.
Since returning to the White House last month, Trump has increased the pressure on European allies to increase their defense expenditure beyond a NATO goal of 2 percent of GDP, which was currently in turning 5 percent as a new goal – which is currently only close to Poland to reach.
High -ranking politicians across Europe have undertaken to spend more for defense in the past few days. British Prime Minister Sir Keir Starrer has offered to put British troops in the foreground and to have committed to accepting a “way” for the country’s defense spending in order to achieve 2.5 percent of GDP.
In an interview with Reuters on Friday, Rheinmetall’s managing director Armin Papperger said that the company would grow more than previously expected.
In an interview with the Financial Times this month, Papperger said: “It takes the size to be able to play in the same league as the American Arms Companies. . . In order to satisfy the high demand in Europe, we need weapons production on an industrial scale – this is also what politicians are demanding. “
Until almost three years ago, Ukraine in Ukraine in Russia’s full invasion of the foreground, some investors had carefully supported the defense sector due to ethical concerns.
The returns of the government bonds rose when investors switched to the price in free defense spending. The return of the German 10-year bond from Benchmark rose by 0.06 percentage points to 2.48 percent because the debt price dropped.
Ten -year -old gold -plated returns rose by 0.03 percentage points to 4.53 percent.
“With regard to the market effects, higher defense spending should lead to an upward pressure on the European rates,” said Jefferies’ Mohit Kumar.
“However the peace process is, it is clear that Europe has to increase expenses for its defense, he added.
Additional reporting from Ray Douglas
