European defence stocks rally as Trump elected US president
Europe aerospace and defence index hits record high
Analysts see rise in military spending in Europe
Trump might bring about rapid end to Ukraine war
Most global funds still have no exposure to sector
Adds fund manager quotes, details, updates prices
By Danilo Masoni
MILAN, Nov 6 (Reuters) -European defence stocks were among the leading gainers on Wednesday after Republican Donald Trump was elected US president, in a remarkable return that is fuelling bets of higher military spending in the region.
Trump back in the White House is seen as bullish for European defence stocks, given his warnings that he would scale back U.S. military support and force NATO members to spend 2% or more of their GDP on defence.
"Trump's victory puts U.S. commitments to NATO and European security in doubt," said Tom Bailey, head of ETF Research at HANetf. "While European countries have already ramped up defence spending to 'Trump proof' their security, his return potentially accelerates this".
An index of European aerospace and defence stocks .SXPARO soared as much as 3.5% to a fresh record high by 1206 GMT, bringing gains so far in 2024 to 32%, twice as much the surge in theMSCI indexof world stocks .MIWO00000PUS.
Top gainers on the index included Germany's Hensoldt HAGG.DE, Rolls-Royce RR.L and BAE Systems BAES.L in the UK, Italy's Leonardo LDOF.MI and France's Safran SAF.PA. Their shares rose between 2.3 and 4%. Sweden's SAAB SAABb.ST was down 0.9% after earlier rising as much as 4%.
Some analysts have also said if Trump follows through on pledges to quickly resolve the war in Ukraine, there is the possibility that the sector goes through heightened volatility, which might create some buying opportunities.
"I expect an increase in the defencebudgets. The war in Ukraine will likely end more quickly than previously anticipated, while the situation in the Middle East may become more complicated," said Andrea Scauri, senior portfolio manager at Swiss asset manager Lemanik.
Morgan Stanley's investor positioning data shows 72% of global funds have no exposure to the European defence sector.
Reporting by Danilo Masoni; additional reporting by Bansari Mayur Kamdar; Editing by Amanda Cooper
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
