European Weapons Manufacturers See Share Price Surge Amidst Starmer's Pledge and Push for Peace Deal

European Weapons Manufacturers See Share Price Surge Following Starmer's Pledge

The share prices of European weapons manufacturers have experienced a significant surge following Sir Keir Starmer's pledge to develop a "coalition of the willing" to defend Ukraine. This surge comes amidst a push for a peace deal in the ongoing conflict.

On Monday morning, shares in Britain's BAE Systems jumped by 19%, while Germany's Rheinmetall gained 14%, France's Thales increased 16%, and Italy's Leonardo was up 10%. This surge reflects the anticipation of increased production and spending on defense equipment in response to the heightened security threat posed by Russia.

Weapons manufacturers have long expressed their readiness to increase production should European governments place orders. Additionally, defense leaders have consistently called for an increase in spending to reflect the heightened security threat posed by Vladimir Putin's Russia following his invasion of Ukraine.

Sir Keir Starmer, at a conference on Sunday, addressed world leaders, including Ukrainian president Volodymyr Zelensky, stating that Europe was "at a crossroads in history." He has already signaled his willingness to send British troops, alongside French forces, to Ukraine in a peacekeeping capacity.

The surge in share prices extended beyond weapons manufacturers, with aerospace companies with significant defense revenues also experiencing gains. Airbus rose by 3%, France's Safran increased by 2.7%, and Rolls-Royce gained 6%, hitting a record high after the British jet engine manufacturer recorded strong results last week.

Other stocks linked to the defense sector also enjoyed sharp gains on Monday. Defense technology group QinetiQ was up 9% in the FTSE 250, followed by Babcock International with a 7% rise and Chemring up 4%. Among small-cap stocks, helmet and gas mask maker Avon Technologies saw a 7% increase, while Cohort, a specialist in sonar, torpedo, and communications, surged 10%.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, commented on the situation, stating that "A show of cooperation among leaders at the weekend in London has reinforced expectations that military budgets will swell in a new era of collaboration to counter the Russian threat.