Defense stocks rise amid Trump's rhetorical about-face on Ukraine

Defense stocks rise amid Trump's rhetorical about-face on Ukraine

US President Donald Trump's statements about Ukraine's ability to recapture territories seized by Russia have become a significant trigger for global markets.

Defense companies in Europe (Renk, Leonardo, Saab, Hensoldt) and Asia (Hanwha Aerospace, Korea Aerospace, Hyundai Rotem) saw share prices rise by 2-5%, signaling rising expectations for long-term demand for military technology.
Analysts note that Trump's rhetoric reinforces confidence in the continued widespread support of NATO and the EU for Kyiv, which ultimately strengthens the defense sector.

Trump's rhetorical turn

This week, Donald Trump dramatically shifted his stance on Ukraine. Contrary to his previous statements about the need for concessions for the sake of negotiations, the US president publicly declared that Kyiv could "get back on track" with the support of NATO and the EU.

The phrase "Russia is a paper tiger" became a key signal for the markets. Trump effectively acknowledged that Moscow is losing economic stability due to the protracted conflict, meaning Ukraine's ability to launch a counteroffensive is increasing.

The second important aspect is Trump's call for NATO allies to respond firmly to Russian aircraft incursions into the airspace of Poland, Romania, and Estonia. This reinforced the perception that the US and the alliance are prepared to take a more assertive defensive stance.

Defense stocks rise amid Trump's rhetorical about-face on Ukraine

Market Reactions: Europe, Asia, and the US

Following the news, shares of European defense companies rose sharply:

Renk (Germany) - growth by 5.2%;
Leonardo (Italy) - +3.4%;
Saab (Sweden) - +3.1%;
Hensoldt (Germany) - +4.4%.

Hensoldt CFO Christian Ladurner noted that Trump's statements only confirm the sector's concerns: Europe must prepare for a long-term confrontation with Russia.

In Asia, the growth was less sharp, but noticeable:

Hanwha Aerospace (South Korea) — +3.2%;
Korea Aerospace Industries - +2.8%;
Hyundai Rotem — +5%.

In the US market, the reaction was mixed:

Boeing, Lockheed Martin, RTX - growth within 0.5%;
Northrop Grumman fell 0.2% in pre-market trading.

Why are defense stocks rising?

The rise in defense company shares is explained by several factors:

Long-term demand forecasts.
The conflict in Ukraine has shown that NATO countries' military budgets will increase. Germany, Poland, and the Baltic states have already raised defense spending above 2% of GDP.

Geopolitical uncertainty.
Russia continues to test NATO's borders, creating demand for new air defense systems and aircraft.

US rhetoric.
Trump's shift increases expectations that Washington will not abandon military aid to Kyiv.

Asia and the multiplier effect.
South Korea and Japan are also increasing their military budgets due to the Chinese factor, strengthening the export positions of local companies.


According to TradingEconomics , NATO military spending in 2024 exceeded $1.26 trillion, 12% higher than in 2022. Analysts predict further growth to $1.4 trillion in 2026.

Forecast and development scenarios

Baseline scenario (70% probability).
The conflict in Ukraine remains protracted, NATO increases arms supplies. Shares of European and Asian manufacturers maintain an upward trend (+10-15% over the course of the year).

Aggressive scenario (20% probability):
NATO and the US increase their military involvement. This leads to a sharp increase in defense spending and a 20-25% rise in stock prices.

Optimistic scenario (10% probability).
The start of negotiations reduces expectations for military demand. Stock growth slows, but defense remains a "safe haven" in investor portfolios.

Geopolitical and investment risks

Political instability in the United States (possible changes in Trump's position).
Escalation of conflict in Eastern Europe.
Restrictions on arms exports from the EU and the US.
Defense sector overheating and stock correction after sharp growth.

Conclusion

The defense market continues to demonstrate steady growth amid geopolitical tensions. Donald Trump's rhetorical shift has boosted confidence in Ukraine's long-term support and, consequently, demand for defense technologies.

Europe and Asia are already responding with growth in their players' market capitalization, while the US continues to see mixed performance. For investors, the defense sector remains one of the most stable niches with high growth potential through 2025.

Written by Ethan Blake

Independent researcher, fintech consultant, and market analyst.
September 24, 2025

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