The geopolitical events continue to heavily condition the world markets, determining the performance of specific sectors, such as that of the defense, which remains inextricably linked to the events of the war between Russia and Ukraine and, specifically, to the possibility of a agreement for a “right and lasting” peace invoked by most.
Yesterday, defense titles are accepted on the main world bags, serving a high probability of agreement between Putin and Zelensky, in the wake of what emerged from the summit to the White House, with Trump and the European leaders, who has rekindled hopes for a diplomatic solution to the war in Ukraine, opening the way to a trilateral summit with Trump, Putin and Zelensky.
The hypothesis of the end of the war that for three years upsets Europe and a downsizing of military expenditure would have consequences on defense companies, which have been made of large profits here.
The Black Defense Tuesday
The defense and aerospace sector highlighted important losses yesterday, Tuesday 19 August, in response to what emerged from the Washington summit the night before (Monday). The Stoxx Europe Aerospace and Defense index left 2.6%on the parterre, resulting one of the worst sectors on European markets. Among the worst, the German Rheinmetall sold 4.85%, resulting in the worst title of the Dax30, after having recorded the most brilliant performance of 2025 so far inside the German Blue-Chips basket.
Leonardo and Fincantieri also collapsed in Milan, both of them about 10% of their value, after having recorded performances of +71% and +137% from the beginning of the year respectively.
Drop continues on peace betting
After yesterday’s heavy sales, the sector continues to be affected by sales, more or less marked and distributed on European markets. The Stoxx Europe Aerospace and Defense index gives another 0.5%today, bringing the performance to a week to -0.9%.
In London the descent of Rolls-Royce continues which loses 1.4% and Qinetiq 1.15%, while the quotes of Bae Systems are stabilized, which travels on equality. The French Thales also keeps around yesterday’s levels on the Paris Stock Exchange, while the Germans Hensoldt and Rheinmetall contain the drop.
As for the titles listed in Piazza Affari, Leonardo benefits from some coverage (+0.45%), while Fincantieri records fractional losses (-0.60%).
But will it be just a peace problem?
On closer inspection, the defense sector has gained a lot in the last year, so much so that the assessments of European titles still imply a strong increase in military spending in the EU; even after the correction of last Tuesday.
According to Citigroup analysts, many companies in the sector should increase the operational profit of 4 or 5 times between 2025 and 2034 to justify the price of their actions, a growing growth compared to that justified by the expected increase in government budgets for defense.
