European defense stocks lift markets higher; Best day for BAE Systems since 2022 – CNBC
Source: CNBC
This was CNBC’s live blog covering European markets.
European stocks closed higher on Monday as a number of defense stocks soared.
The pan-European Stoxx 600 ended the session with a 0.54% gain, bouncing back from a slight decline Friday to mark another all-time closing high of 555.42 points. Last week saw the regional index close at successive new records.
The index was lifted by a 4.2% uptick in the Stoxx 600 Aerospace and Defense index, as European leaders came together to discuss regional defense efforts and appearing willing to pledge more spending for the sector.
Germany’s Renk Group and Rheinmetall were 17.5% and 14% higher respectively, as Swedish defense manufacturer Saab gained more than 16%. Meanwhile, the U.K.’s BAE System rose 9%, it’s best day since July 3, 2022, according to FactSet data.
Geopolitical tensions between the U.S. and Europe are likely to remain in focus for European markets this week as U.S. officials prepare for talks with Russia to end the war in Ukraine, with officials in Kyiv and Europe being left out of the discussions.
European leaders held an emergency summit in Paris on Monday to discuss how to respond to U.S. President Donald Trump’s apparent decision to sideline Europe, and how to guarantee Ukraine’s country’s security in the future.
Over the weekend, global officials met in Germany for the Munich Security Conference, where European defense spending was in focus. EU Commission President Ursula von der Leyen said at the event that Brussels would float exempting defense spending from the bloc’s fiscal rules, while NATO chief Mark Rutte said the military alliance planned to discuss increasing spending targets at a summit in June.
Overnight, Asia-Pacific markets traded mostly higher as investors parsed Japan’s fourth-quarter economic growth data, while awaiting a slew of central bank decisions from Australia, Indonesia and New Zealand this week.
U.S. financial markets are closed on Monday for the Presidents Day holiday.
European stock markets regained positive momentum on Monday, with the Stoxx 600 index closing up 0.59% at an all-time high of 555.65.
Germany’s DAX led major bourses with a 1.26% gain, while France’s CAC 40 and the U.K.’s FTSE 100 were 0.13% and 0.41% higher respectively.
David Groman, global equity strategist at Citi, weighs in on the outlook for European equities.
Ironing out the 2026 budget of the euro zone’s second-largest economy will prove a “demanding” task, French Finance Minister Eric Lombard told CNBC’s Charlotte Reed on Monday, after lawmakers earlier this year finally agreed 2025’s financial plan after a spate of tumultuous, government-toppling attempts.
“2026, yes, it is a very demanding budget, because we will continue to diminish the deficit and to be below, of course, below 5.4%, and probably below 5%,” the finance minister told CNBC on Monday, noting the government had yet to define the latter target figure, but that it plans to utilize the same methods that brokered the financial agreement for 2025.
The chief executive of Italy’s Leonardo has called for the creation of “EU defense giants” to fix the “fragmented and inefficient” military hardware development sector in Europe.
“The European defense industry is currently too fragmented and inefficient, with each country pursuing its own strategy and developing its own weapons systems and platforms,” said the defense firm’s CEO Roberto Cingolani. “While European companies are large, they are not sufficiently powerful in the current context. The creation of EU defense giants is essential. For this reason, Leonardo is deeply committed to fostering alliances within the European defense industry.”
“The company is actively promoting international cooperation through industrial partnerships, such as the one established with Rheinmetall, with the strategic goal of acting as a catalyst for the strengthening of the European defense sector,” Cingolani added in a statement to CNBC.
— Ganesh Rao. CNBC’s Virginia Vitalone contributed reporting.
British employers plan to reduce their headcount and make redundancies in 2025 due to the impending increases to National Insurance Contributions (NIC) and increasing National Minimum Wage, a new CIPD survey of over 2,000 U.K. employers found.
Almost a third of employers plan to reduce headcount through redundancies or by hiring less, with 25% intending to make redundancies by March 2025, according to the survey.
The survey’s net employment balance, which measures whether employers expect an increase or decrease in staff levels in the next three months, significantly decreased from +21 last quarter to +13 this quarter.
The U.K.’s labor government announced its new budget plan in October 2024, which will see a 6.7% rise in the minimum wage for over 21-year-olds to £12.21 ($15.4). Meanwhile, employer NI contributions will rise from 13.8% on earnings above £9,100 per year to 15% on salaries above £5,000 a year.
“These are the most significant downward changes in emp
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