European army stocks fall on Ukraine peace discussions advancement
(MENAFN) European military stocks have declined despite broader market gains, as investors reacted to the White House meeting that raised hopes for a Ukraine peace deal.
US President Donald Trump met with Ukraine’s Vladimir Zelensky and key Western European leaders on Monday, following his summit with Russian President Vladimir Putin in Alaska, which both sides described as a step toward resolving the Russia-Ukraine conflict.
The STOXX Europe Total Market Aerospace & Defense Index fell 2.6% on Tuesday, with Italian defense firm Leonardo down 10.1%, Germany’s Hensoldt off 9.5%, Rheinmetall down 4.9%, and tank component maker Renk falling 8.2%. Craig Cameron of Franklin Templeton said any de-escalation in tensions or talk of purchasing US equipment is “negative for these companies.” Analysts note that defense stock performance can reflect expectations about the continuation of conflict, as ongoing wars boost military demand.
European defense shares had surged earlier this year after Germany eased debt limits to fund new defense investments, and the EU launched a $900 billion initiative to militarize its economy amid perceived Russian threats.
The recent US-mediated talks reportedly included an agreement in principle for a direct Putin-Zelensky meeting, though the Kremlin has yet to confirm the details. AFP reported that Putin offered Moscow as a venue, but Zelensky insisted on a neutral location.
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