Rally In Defense Stocks Lifted European Markets by 1%

Bridgette Randall
17 Feb, 2025
London

Stock market indexes in Europe advanced, overlooking the brewing geopolitical tensions and uncertainty related to the U.S. economic and trade policies. 

Benchmark indexes in Frankfurt, Paris, Milan, and London advanced as much as 0.8%, led by gains in defense stocks. 

Rheinmetall AG, MTU Aero Engines, Thales SA, Airbus SA, Dassault Aviation, BAE Systems, and Safran jumped between 2% and 10% after European leaders gathered to discuss plans to increase the defense budget.

European governments are likely to revise their defense budgets in the months ahead as the U.S. pushes with peace talks with Russia and demands higher spending by NATO allies. 

European leaders have lagged in meeting their commitments of defense spending at least between 2% and 3%, but the Trump administration is demanding that spending increase to as much as 5%.

 

Europe Indexes and Yields

The DAX index increased by 0.3% to 22,573.34, the CAC-40 index edged lower 0.1% to 8,169.18, and the FTSE 100 index increased by 0.1% to 8,741.79. 

The yield on 10-year German bonds inched higher to 2.48%, French bonds increased to 3.18%, the UK gilts moved up to 4.58%, and Italian bonds edged higher to 3.58%.

The euro decreased to $1.05; the British pound was higher at $1.26; and the U.S. dollar was higher and traded at 90.03 Swiss cents.

Brent crude increased $0.24 to $75.98 a barrel, and the Dutch TTF natural gas was lower by €0.79 to €50.05 per MWh.

 

Europe Stock Movers

Stocks in Germany advanced after the benchmark index soared as much as 1%, driven by hopes of higher government spending. 

Siemens Energy, Munich Re, MTU Aero Engine, BMW, and Allianz advanced between 1% and 1.5%.