European defence stocks are enjoying a blistering start to 2026, as US threats to take control of Greenland and tensions with Venezuela reignite a rally in one of last year’s hottest equity market sectors.
The Stoxx Europe Aerospace and Defence index has surged nearly 15 per cent this month, equivalent to more than one-quarter of its record-breaking gains last year. Among the biggest risers are Sweden’s Saab, up 32 per cent, Germany’s Rheinmetall, up 22 per cent, and the UK’s BAE Systems, which has risen 22 per cent.
The US’s shock capture of Venezuela’s leader Nicolás Maduro and President Donald Trump’s repeated demand that the US must “have” Greenland — including his refusal to rule out military action to do so — have led investors to bet European governments will have to keep on raising defence spending for some time to come, benefiting domestic suppliers.