Market Rally
Defense shares across Europe and Asia surged on Wednesday, September 24, 2025, as markets reacted to a major rhetorical shift by U.S. President Donald Trump on Ukraine policy. The European benchmark aerospace and defense index climbed 1.1%, outpacing the broader STOXX 600, which slipped 0.4%. The sector has seen explosive growth since Russia’s 2022 invasion, with gains exceeding 200%.
Top Gainers
Sweden’s Saab led the rally, jumping nearly 5% to its highest level since mid-July. Germany’s Rheinmetall, the continent’s largest ammunition producer, advanced about 2%, while UK-based BAE Systems, Europe’s biggest defense firm by market cap, gained 1.4%. Italy’s Leonardo was up 3%, German Hensoldt rose 4.6%, and France’s Thales and Dassault Aviation posted gains between 1.6% and 1.9%.
Asian Markets Follow
Hanwha Aerospace, Korea Aerospace Industries, and Hyundai Rotem in South Korea saw increases from 2% to 5%. Japan’s IHI Corp surged almost 10%, and Mitsubishi Heavy Industries climbed over 5%. The MSCI Global Aerospace & Defense Index is up 51% this year, far outpacing the 17% global equities gain.
Policy Shift
The rally followed Trump’s unexpected comments on his Truth Social platform, where he asserted that Ukraine, with EU support, is “in a position to fight and WIN all of Ukraine back in its original form.” He described Russia as a “paper tiger” facing significant economic trouble and suggested now is the time for Ukraine to act decisively. This marks a dramatic pivot from his earlier suggestion that both sides should consider territorial compromises.
Broader Context
NATO countries raised their defense spending targets in June, committing to spend 3.5% of GDP on core defense. Analysts cited escalating tensions between NATO and Russia as a key driver for continued defense sector strength. “Trump’s about-face on Ukraine policy is bringing defense stocks into play today,” noted Jochen Stanzl of CMC Markets.
Takeaway
Wednesday’s market action highlights the sensitivity of global defense stocks to geopolitical rhetoric and shifting U.S. foreign policy. Investors are betting on sustained growth in military spending as Europe and Asia respond to evolving security threats.
