European defense stocks surged on Monday after leaders met with Zelenskyy in London.
Ukraine’s president left Washington on Friday without a minerals deal after clashing with Trump.
Rheinmetall, BAE Systems, and Leonardo rose sharply amid expectations of higher defense spending.
European defense stocks surged again on Monday as the UK, France, and Ukraine agreed to work on a peace deal following Volodymyr Zelenskyy’s clash with President Donald Trump.
European leaders met with the Ukraine president in London on Sunday.
Expectations of rising demand for weapons and other military equipment are behind the stock surges on European markets.
UK Prime Minister Keir Starmer said last week that Britain would raise defense spending from 2.3% of GDP to 2.5% by 2027. Germany’s likely next chancellor, Friedrich Merz, has vowed to prioritize European security and continue supporting Ukraine.
Ben Heelan, a Bank of America analyst, said in an email that raising the defense spending target to 3% of GDP was «becoming the base case for the NATO leaders summit» in late June.
Analysts at Deutsche Bank said in a note that speculation had increased over special funds for defense and infrastructure being established by the existing German parliament following last month’s election.
Shares in Rheinmetall jumped as much as 18% in Frankfurt on Monday, bringing the rise this year to 86%.
Germany’s biggest defense firm makes armored fighting vehicles and personnel carriers.
Rheinmetall opened a joint production and repair facility in Ukraine in June 2024.
The CEO, Armin Papperger, said the company also planned to open a new air defense facility in the country.
The stock has soared more than 1,300% since 2019, valuing Rheinmetall at 48 billion euros.
Shares in London-listed aerospace and defense company BAE Systems soared more than 18% in a record one-day rise and a new high, bringing the increase this year to almost 40%.
BAE is Europe’s largest manufacturer of defense, aerospace, and security products and employs about 107,000 people in more than 40 countries.
It announced in 2023 that it was opening a facility in Ukraine to ramp up its support for the country’s armed forces.
Other London-listed defense stocks made strong gains Monday, with Rolls-Royce up almost 6% and QinetiQ, the defense technology company, gaining more than 10%.
Shares in Italy’s Leonardo, one of the manufacturers of the Eurofighter Typhoon jet, rose as much as 15% in Milan and have notched up a 65% share price gain since the start of January.
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