European defense stocks led by Rheinmetall (RNMBY) and BAE Systems (BAESF) surged on Monday after European leaders rallied to Ukraine following president Zelensky’s Oval Office bust-up with Donald Trump, and signalled they would seek to create a peace plan of their own.
Germany’s Rheinmetall (DE:RHM) and the UK’s BAE Systems (GB:BA) jumped at the start of trade as JPMorgan upgraded its price targets on both stocks in the wake of the London summit on Ukraine over the weekend, at which Britain and France put forward a four-step plan for peace with Russia. Sweden’s Saab (SAABF), Italy’s Leonardo (IT:LDO), (DRS) and France’s Thales (FR:HO) also posted gains of more than 10% in early trade. Shares of Rolls-Royce (GB:RR), which hit a record high last week, also climbed.
Europe Builds “Coalition of the Willing”
The gathering of European nations and Canada came immediately after Zelensky and Trump exchanged heated words in the White House before the Ukrainian leader left without signing a mineral rights deal that had been the main reason for his visit. The disastrous meeting left European leaders frantically scrambling to shore up diplomatic support for Ukraine ahead of the prearranged gathering in London.
Announcing a “coalition of the willing,” UK prime minister Keir Starmer said Europe must do the “heavy lifting” to support peace in Ukraine. He set out a four-point plan for Ukraine that involves keeping military aid flowing, boosting the country’s defenses after any peace deal and ensuring boots on the ground would guarantee Ukraine’s security afterwards. The plan also called for Ukraine to be present at any peace talks, and any lasting peace must ensure the country’s sovereignty and security.
Le Figaro reported that France’s president Macron said the UK and France had proposed one-month ceasefire that would cover air, sea and energy infrastructure “and then, once peace is signed, a (troop) deployment.”
Speaking to the BBC, Eléonore Caroit from the French foreign affairs committee seemed to confirm the reports and said the plan would be backed by “security assurances by the French and UK military.”
However, the UK’s Minister of Armed Forces said that “no agreement” has been made between the French and the British about a one-month truce. Also speaking to the BBC, Luke Pollard said “a number of different options” are being discussed “privately.”
Meanwhile, Britain’s Starmer also said the UK would finance Ukraine with an additional £1.6 billion of exports to buy a further 5,000 air defence missiles.
It was also reported on Sunday by Reuters that the German government is considering unlocking hundreds of billions of special funding for defense and infrastructure.
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