Europe Faces a Huge Bill to Defend Ukraine. Investors Are Thrilled.

Published On Mar 3, 2025, 11:02 AM

European defense stocks experienced a significant rally after leaders committed to increasing military support for Ukraine amid ongoing tensions with Russia. This surge was led by major defense companies like BAE Systems, Rheinmetall, and Leonardo, pushing the Stoxx Europe 600 to new highs. However, challenges remain as increased military expenditure could clash with Europe's financial constraints and economic slowdowns. Concerns over public finances and potential cuts to social safety nets are rising, alongside rising bond yields indicating investor anxiety about future spending patterns.