Trump’s unexpected stance
European defense stocks climbed after U.S. President Donald Trump said that Ukraine was capable of regaining all occupied territories from Russia. The remark came after Trump’s meeting with Volodymyr Zelensky on the sidelines of the UN General Assembly in New York on September 23.
This marked a dramatic shift from Trump’s earlier suggestions that Kyiv might have to concede territory to reach peace with Moscow.
Market reaction
According to Reuters, the European aerospace and defense index rose 1.1%, nearing record highs and outperforming the broader STOXX 600, which fell 0.4%.
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Defense industry stocks have risen over 200% since Russia’s full-scale invasion in February 2022.
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Defense shares are also among the largest contributors to the 9% rise in the STOXX 600 this year.
“Trump’s sharp change of stance on Ukraine is boosting trading in defense stocks today,” said Jochen Stanzl, analyst at brokerage CMC Markets.
NATO spending boost
Markets are also factoring in higher defense budgets. In June, NATO countries pledged to spend 3.5% of GDP on core defense and 1.5% on related activities — a significant increase from the current 2% GDP target.
This translates into hundreds of billions of dollars in additional defense spending annually across Europe.
Stock performance highlights
Several major European defense companies saw immediate gains:
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BAE Systems (UK): +1.4%
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Rheinmetall (Germany): +2%
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Saab (Sweden): +5%, its highest since mid-July, also supported by reports of potential German purchases of its Global Eye reconnaissance aircraft.
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Indra (Spain): +3%
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Hensoldt (Germany): +4.6%
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Renk (Germany): +3%
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Leonardo (Italy): +3%
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Thales (France): +1.6%
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Dassault Aviation (France): +1.9%
Analysts’ perspective
“Rising tensions between NATO and Russia are a clear trigger for defense stocks to rise,” said Neil Wilson, strategist at Saxo Markets.
While markets reacted strongly, analysts note that Trump’s comments have not yet translated into concrete U.S. policy changes — such as new sanctions on Russia, which Zelensky is lobbying for during his New York visit.
Context
Ukraine continues to press forward militarily. Ukrainian forces have deoccupied 360 square kilometers and captured around 1,000 Russian prisoners, according to recent reports.
Trump’s statement that Ukraine could fully reclaim its territory with EU support signals not only a shift in perception but also market confidence that the war — and NATO’s involvement — may be longer-term and more intensive than previously expected.
✅ Bottom line: Trump’s surprising endorsement of Ukraine’s full territorial recovery sparked a surge in European defense stocks, underscoring investor confidence in rising defense spending and the durability of Western support for Kyiv.
