In the space of just a few hours of frantic trading last week, shares in the defence giant BAE soared by 15pc. Over the last month, Germany’s Rheinmetall is up 60pc, while Italy’s Leonardo and France’s Thales are up by similar amounts. Europe’s defence stocks have turned into the new heroes of the market.
It is easy to understand why that is happening. If the continent rearms in the way it may have to, their order books will soon be bulging. The trouble is, the stock market reaction is starting to look very like a frenzied bubble – and that won’t help anyone.
Over the last few days Europe’s defence contractors have chalked up the kind of performance we typically associate with AI stocks or cryptocurrencies. Europe’s aerospace and defence index rose by 8pc last Monday, its best one-day performance since 2020. Many individual stocks were up by double-digit percentages. If a company had any connection to missiles, tanks or guns, investors wanted a slice of it, convinced that a boom is just around the corner.
In the space of just a few hours of frantic trading last week, shares in the defence giant BAE soared by 15pc. Over the last month, Germany’s Rheinmetall is up 60pc, while Italy’s Leonardo and France’s Thales are up by similar amounts. Europe’s defence stocks have turned into the new heroes of the market.
It is easy to understand why that is happening. If the continent rearms in the way it may have to, their order books will soon be bulging. The trouble is, the stock market reaction is starting to look very like a frenzied bubble – and that won’t help anyone.
Over the last few days Europe’s defence contractors have chalked up the kind of performance we typically associate with AI stocks or cryptocurrencies. Europe’s aerospace and defence index rose by 8pc last Monday, its best one-day performance since 2020. Many individual stocks were up by double-digit percentages. If a company had any connection to missiles, tanks or guns, investors wanted a slice of it, convinced that a boom is just around the corner.