Investing.com -- European defense stocks surged in early trading Monday, while futures for the Euro Stoxx 50 also advanced, as regional leaders reaffirmed their support for Ukraine amid concerns over a potential U.S. policy shift.
Euro Stoxx 50 rose 0.3% as of 08:25 GMT. Major defense stocks BAE Systems (LON:BAES) and Rheinmetall (ETR:RHMG) jumped 15% and 17%, respectively, while Thales (EPA:TCFP) and SAAB AB ser. B (BS:SAABBs) surged 17% and 12%, respectively.
Dassault Aviation rose 15%, Rolls Royce (LON:RR) added over 4%, and Leonardo SpA (BIT:LDOF) leaped around 15%.
The surge comes after UK Prime Minister Keir Starmer and other European leaders met in a security summit in London to reaffirm support for Ukraine while working behind the scenes to bring Volodymyr Zelenskiy back into talks with U.S. President Donald Trump.
Over the weekend, leaders including Italy’s Giorgia Meloni and France’s Emmanuel Macron sought to repair Zelenskiy’s diplomatic clash with Washington last week. The fallout, coupled with Trump’s outreach to Vladimir Putin, accelerated efforts to bolster Europe’s defense capabilities.
Inside Lancaster House on Sunday, leaders aimed to persuade Trump to stay engaged with Europe and Ukraine ahead of his planned talks with Putin. Macron told Le Figaro that some countries were considering a one-month truce to facilitate negotiations on peacekeeping forces, though a British official said no timeline had been agreed.
The UK and France are pushing for a “coalition of the willing” to support a peacekeeping force and reassure Kyiv. European officials say they hope to present this “Europe-plus” initiative, potentially including Canada, to Trump in the coming days.
“From my discussions over recent days, we’ve agreed that the UK, France and others will work with Ukraine on a plan to stop the fighting,” Starmer said. “Then, we’ll discuss that plan with the United States.”
Vincent Juvyns, global market strategist at JPMorgan (NYSE:JPM) Asset Management, noted that despite recent diplomatic tensions, investors see two key trends: a possible resolution in Ukraine by 2025 and an expected increase in public defense budgets.
“One senses a large consensus for Europe to take its future in its own hands, and that more military spending is coming,” he said.
Anticipation of stronger defense outlays across Europe has fueled a rally in stocks tied to the sector.