The Goldman Sachs basket of European defense firms (GSSBDEFE) jumped nearly 3% on Wednesday after President Trump posted a surprising comment on Truth Social, saying Ukraine is now positioned to fully reclaim its original territory from Russia in a 3.5-year war. Trump then called Russia a “paper tiger”…
Here’s a snippet from Trump’s Truth Social post that sparked upside in the GS EU Defense basket that consists of European names with exposure to defense spending:
“After getting to know and fully understand the Ukraine/Russia Military and Economic situation and, after seeing the Economic trouble it is causing Russia, I think Ukraine, with the support of the European Union, is in a position to fight and WIN all of Ukraine back in its original form.”
Really?
The GS European Defense basket is up 2.7% in early afternoon trading. Industry heavyweight Rheinmetall AG gained 2%, while the UK’s BAE Systems Plc rose 1%. Sweden’s Saab AB jumped 5% to a record high. After trading sideways for four months, the defense index appears to have been energized by Trump’s latest comments, sparking renewed optimism among defense bulls.
“Defense should go bid again… Trump’s rhetoric on Russia/Ukraine is a tacit underwriting of the conflict so far. If it’s about motivating rearmament, fine… but geopolitical premia will only stick when events materialize. PLN has barely moved, and Oil is already fading back…structurally bullish on the theme, but unclear if worth chasing on the headline,” top Goldman Sachs trader, Rich Privorotsky, told clients earlier.
The GS EU Defense basket has widely outpaced the STOXX Europe 600 so far this year.
In the US, under our “Hemispheric Defense Theme,” we outlined in late May (read report) how L3Harris was positioned for upside on increased defense spending to build out President Trump’s multilayered defense system (also known as “Golden Dome for America“) …
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