Defence Surge Powers European Stocks to Record Highs

European shares soared to record highs driven by increased anticipation of military spending. The STOXX 600 index rose 1.1%, and major European indexes closed at record levels, fueled by potential Ukraine peace proposals and intentions to boost defense expenditures across the continent.

European shares reached unprecedented levels on Monday, powered by growing expectations of increased military expenditure in the region. Germany’s major index experienced its largest single-day surge since November 2022, culminating in a record close alongside Britain’s primary index.

The pan-European STOXX 600 index surged by 1.1% to an all-time high, continuing its momentum from ten consecutive weeks of gains. Over the weekend, leaders from key European nations committed to enhancing defense budgets, aiming to demonstrate the continent’s self-reliance to U.S. President Donald Trump.

In the wake of proposals for a Ukraine ceasefire, several defense stocks recorded notable gains. Germany's Rheinmetall surged 13.7%, while Italy’s Leonardo advanced by 16%. France’s Thales and Dassault Aviation also saw significant increases. Anticipation of a new defense fund being discussed by Germany’s prospective government further bolstered investor sentiment toward defense companies.