European Defense Stocks Jump After Russian Escalation in Ukraine War

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Christina stopped. By

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Shares in European defense names traded sharply on Wednesday after Russian President Vladimir Putin ordered mobilization of reservists and raised the threat of a nuclear reaction in a major escalation of the war in Ukraine.

At 0838 GMT, shares of German tank-and-artillery maker Rheinmetall AG traded 9.5% higher. France’s Thales SA and Dassault Aviation SA traded 5.7% and 5% higher, respectively, while Italy’s Leonardo Spa gained 6%.

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According to Stifel analyst Alexander Wahl, Wednesday’s news appears to, at least, eliminate the possibility of a ceasefire in Ukraine, something that investors saw as the biggest risk to the defense sector.

All four firms have made significant gains since the war first broke out in Ukraine, as governments vowed to increase their defense spending.

However, the performance of defense stocks faltered recently as governments’ increased defense budgets took longer than expected to boost the sector’s order book, Mr Wahl said.

Jefferies analyst Chloe Lemary said the recent correction reflects extreme bearish sentiment amid broader macroeconomic concerns, and Wednesday’s move appears to be the reverse.

Write to Christina Roca at [email protected]

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