European Stocks Slip as Defense Sector Surges on Ukraine’s $105B EU Loan Boost
European shares ended lower on Thursday as investors reacted cautiously to rising geopolitical tensions and mixed economic signals from global markets. The pan-European Stoxx 600 slipped about 0.5%, with most major indexes across London, Paris, and Frankfurt closing in negative territory. Italy’s FTSE MIB stood out as the only major index to post gains for the session.
Market sentiment was largely driven by uncertainty surrounding ongoing developments in the Middle East, particularly U.S.–Iran relations. Investors monitored diplomatic discussions alongside reports of military activity and shifting statements on the Strait of Hormuz, a critical global oil route. These tensions helped push oil prices higher and kept energy markets volatile throughout the day.
In contrast to the broader decline, European defense stocks saw strong gains after Ukraine’s parliament approved a massive €90 billion (about $105 billion) loan agreement with the European Union. The deal reinforced expectations of sustained military spending, especially as Ukraine continues strengthening its defense partnerships across Europe. Additional reports of potential fighter jet cooperation between Sweden and Ukraine further boosted optimism in the sector.
Defense-related companies led the rally, with Swedish aerospace giant Saab climbing sharply, alongside gains in German and French defense manufacturers including Rheinmetall, Renk, and Exail Technologies. Investors appeared to price in long-term demand for military equipment as Europe continues to adjust its security posture amid the ongoing war in Ukraine.
Elsewhere, corporate earnings and economic data added to the mixed trading picture. Spain’s eDreams saw a strong jump in shares despite slightly missing profit expectations, while Poland’s Orlen posted better-than-expected earnings growth. In the United States, markets showed a more positive tone, with major indexes edging higher as investors digested fresh inflation data showing persistent price pressures.
source: cnbc