LIVE MARKETS-Europe's defence sector set for biggest weekly jump since 2020

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EUROPE'S DEFENCE SECTOR SET FOR BIGGEST WEEKLY JUMP SINCE 2020

While some equity markets have wobbled this week on Trump's tariff threats, Europe's aerospace and defence stocks have powered ahead, and look set for their biggest one-week jump since November 2020.

The STOXX Europe Aerospace and Defence index .SXPARO is up 0.6% on Friday, taking its weekly rise to 8.4%, as Europe steps its rhetoric in regards to increasing defence spending.

"Across the EU, proposals being circulated infer a cumulative EUR500 billion increase in defence spending over a 3-year view, bringing spending close to 3% of GDP across the bloc," notes Mark Dowding, fixed income CIO at RBC BlueBay Asset Management.

Gains across the sector have been broad-based, with Rheinmetall RHMG.DE, Leonardo LDOF.MI, Saab SAABb.ST and BAE Systems BAES.L all up between 7.7%-12%.

The rally might have legs, and the defence sector has prompted Jefferies economist Mohit Kumar to take a more positive view on Europe as a whole.

"We have .. been shifting towards a bullish view on European stocks, in particular defence," Kumar writes.

"We continue to believe that Europe has no choice but to significantly increase its defence spending. Hence, Europe should outperform US in the coming weeks."

(Samuel Indyk)

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