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European defense stocks close higher amid geopolitical tensions
European equities ended Thursday's session in negative territory, with the pan-European Stoxx 600 index closing 0.2% lower amid mixed performance across sectors and major bourses.
Defense Stocks Surge on Military Budget Proposal
Defense stocks were a notable exception, extending their rally for a fifth consecutive day. The Stoxx Europe Aerospace and Defense index rose 1.1%, driven by President Donald Trump's call for a 50% increase in U.S. military spending. In a Truth Social post late Wednesday, Trump stated the military budget for 2027 should be $1.5 trillion rather than $1 trillion to build a "Dream Military" that ensures security.
Individual gainers included Renk, which rose 2.9%, Leonardo, which gained 2% to hit a 52-week high, and Rheinmetall, which advanced 1.4%. U.S. defense shares also moved higher, though they pared some gains after Trump later stated he would not permit defense companies to issue dividends or stock buybacks until they address issues like executive pay and production.
Oil Stocks Decline on Venezuela Supply Speculation
In contrast, European oil stocks closed lower for a second day, pressured by speculation that U.S. companies could begin extracting Venezuelan oil following the change in government. BP fell 0.6% and Shell declined 3.5%, while Equinor edged up 0.3%. Brent crude futures for March rebounded to trade around $60.95 per barrel after dipping below $60 on Wednesday.
Geopolitical Tensions Remain in Focus
Markets continued to monitor geopolitical developments, including ongoing tensions over Greenland. U.S. Secretary of State Marco Rubio is scheduled to meet Danish officials next week, having downplayed the threat of an invasion, suggesting Trump's aim is to "buy" the territory.
U.S. Market Moves and Upcoming Catalyst
In U.S. trading, the Dow Jones Industrial Average added 0.5% Thursday morning, while the Nasdaq retreated 0.8% and the S&P 500 dipped 0.2%. Investors are awaiting a Supreme Court ruling on the legality of Trump's tariffs, expected Friday, which could introduce market volatility.
No major earnings or economic data releases were scheduled for Thursday in Europe.
