Rising geopolitical tensions, particularly as a result of the war in Ukraine, are having a direct impact on financial markets. Defense sector companies, particularly arms manufacturers, are seeing their shares soar on European stock exchanges, benefiting from expectations of higher military budgets.
The latest political and diplomatic statements, in particular those of European Commission President Ursula Von Der Leyen, US President Donald Trump and his Vice President J.D. Vance, have focused investors’ attention on this sector.
Defense companies on top thanks to rising military spending
Ursula Von Der Leyen’s announcement of the possibility of lifting European budget constraints to allow member states to finance defense was a strong signal for the markets. This proposal echoes the desire to strengthen European defense capabilities in the face of an increasingly tense geopolitical situation. Investors reacted instantly, flocking to the shares of Europe’s leading arms companies.
At last night’s close, Europe’s stock markets recorded notable gains. In France, the CAC40 index gained 0.13%, buoyed by companies such as Thales (+6%), Safran (+2%) and Dassault Aviation (+6%). These companies even reached all-time highs, with increased interest in players such as Dassault Aviation, famous for its Rafale fighter jet, and Thales, specializing in defense systems and cybersecurity.
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Read also > [STOCK MARKET UPDATE] Global markets rise on hopes of peace in Ukraine and luxury goods results
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