European defense stocks have soared this year. Tomorrow, EU leaders will discuss the $840 billion defense plan.
The ReArm Europe Plan will likely be discussed with EU leaders at a special summit tomorrow.
European defense stocks have jumped since Friday’s tense showdown in the Oval Office between US President Donald Trump and Ukrainian President Volodymyr Zelenskyy, as European leaders scrambled to adjust to the new world order over the weekend, pledging billions in new defense spending.
Now, European Commission President Ursula von der Leyen is out with an €800 billion ($842 billion) proposal, most of which would be spread over four years, to beef up Europe’s defense budget and provide “immediate” military support to Ukraine. This ReArm Europe Plan will likely be discussed at a crisis summit with EU leaders scheduled for tomorrow, with plans to discuss joint action on Ukraine and on Europe’s long-term security trajectory.
With the prospect of rising defense spending in Europe, the region’s Stoxx Europe aerospace and defense index closed 8% higher on Monday, marking its best session in five years. Double-digit percentage gains were also seen for companies like Germany’s security sensor company Hensoldt (22%), Italy-based Leonardo (16%), and French aircraft manufacturer Dassault Aviation (15%).
Investors have remained optimistic about European defense stocks pretty much across 2025 so far, especially as American rivals have slumped thanks in part to Trump’s plans to downsize the Pentagon’s budget, which many US defense groups like Lockheed Martin rely on. As of Tuesday, shares in the five largest US defense companies were broadly flat since the start of the year, while their European equivalents have jumped 43%.
