European defense stocks jump on Trump's words on Ukraine

Shares of European defense companies - one of the best-performing sectors in 2025 - jumped on September 24, despite the broad market's decline. Arms manufacturers' stocks reacted to a reversal in US President Donald Trump's rhetoric on the conflict in Ukraine.

In the morning of September 24, the European stock market as a whole was slightly down, but defense sector shares went against the general trend: the STOXX Europe Aerospace & Defense index rose by 1.4%. In Stockholm, the securities of the manufacturer of a wide range of weapons Saab rose by 5%. In Frankfurt, quotations of Europe's largest defense concern Rheinmetall rose by 2.5%, radar supplier Hensoldt - by 5%, tank transmission manufacturer Renk - by more than 3%.

"U.S. President Trump's abrupt change of course on Ukraine is putting defense stocks in play today," CMC Markets analyst Jochen Stanzl, quoted by Handelsblatt, stated.

"Having seen the economic problems (the military conflict - Oninvest) is creating for Russia, I think Ukraine, with the support of the European Union, is in a position to fight and RETURN all of Ukraine to its original borders," the US leader wrote on the social network Truth Social after meeting with Ukrainian President Vladimir Zelensky on the margins of the UN General Assembly. However, there were no signs of any real change in Washington's policy, Reuters noted.

Ukraine has managed to regain some of the territories seized in the first months of the Russian invasion. However, in recent months, Russian troops have been applying pressure along the entire front line and making gains at the tactical level, Deutsche Welle noted.

Since returning to the White House, Trump has repeatedly stated that Ukraine's chances of regaining its former borders are low. In February 2025, he said that the full return of lost territories was "unlikely" and that Ukraine's accession to NATO was "impractical." In August, the US leader toughened his rhetoric, calling both the return of Crimea and membership in the alliance "impossible".

Wall Street analysts suggest to approach shares of European defense contractors selectively. The clear favorite is Rheinmetall - with a consensus rating of "buy" (Buy) and the potential for the stock to rise by 10.5% to €2140.94. Renk shares also remain attractive - although they are now trading exactly at the €76 target, most analysts continue to recommend them for a buy (consensus rating of Overweight).

Hensoldt with a neutral mean rating of "Hold" (Hold) looks overvalued by 9% (€100.6 vs. "fair" €92.4). Saab trades 27% above target (558 kroner vs. 441 kroner) with a consensus "below market" (Underweight) - a risky position even despite a solid order book.

This article was AI-translated and verified by a human editor