Defence stocks climbed sharply across Europe, the United States and parts of Asia on Thursday as renewed geopolitical tensions prompted investors to bet on sustained military spending and stronger order books for defence contractors.
The rally followed the latest US intervention in Venezuela, which added to market unease already fuelled by remarks from Washington about a potential US takeover of Greenland. Together, the developments reinforced expectations that defence budgets will remain elevated amid growing global security risks.
Europe’s aerospace and defence sector reached record levels, with the region’s key defence equity benchmark rising more than 2% during the session.
In London, shares of BAE Systems jumped 5.24% in afternoon trading. Germany’s Rheinmetall gained 1.37%, while Italy’s Leonardo rose 2.55%. Sweden’s Saab advanced 2.39%, and UK-based countermeasures specialist Chemring added 0.79%.
US defence stocks also traded higher in pre-market activity, supported by comments from Donald Trump calling for a $1.5 trillion US military budget in 2027.
Shares of Northrop Grumman were indicated up 8.52%, while Lockheed Martin rose as much as 7.67%. RTX gained 3.78%, and smaller defence contractor Kratos Defense surged more than 13%.
Asian markets had already seen similar moves earlier in the day. In Japan, Mitsubishi Heavy Industries climbed 2.38%, reflecting the broader global shift into defence-related stocks.
Market analysts drew parallels with previous geopolitical shocks, including February 2022, when Russia’s invasion of Ukraine triggered a sharp re-rating of European defence stocks amid expectations of higher military budgets. The sector has continued to outperform since then as conflicts persist and security concerns intensify.
A comparable rally was also seen following the October 7 attacks on Israel by Hamas, when aerospace and defence shares gained nearly 6% in the days that followed, while airline stocks declined.
