European Defense Stocks Slide As Trump-Zelensky Peace Talks Show Progress
European defense stocks moved lower on Monday after President Trump and Ukrainian President Volodymyr Zelensky made progress in talks aimed at ending the Russia-Ukraine conflict.
On Sunday evening, after the talks, Trump told reporters, "I do think we're getting a lot closer, maybe very close."
Zelensky told reporters the peace talks were a "really great discussion" in which U.S.-Ukraine security guarantees were "100% agreed" upon. He added, "We agree that security guarantees are a key milestone in achieving lasting peace."
Zelensky said Trump will host another meeting next month with Ukrainian and European officials to advance a peace deal that is nearing completion. Trump confirmed that he spoke with Russian President Vladimir Putin ahead of the Zelensky talks and plans to hold another call with Putin.
The full summary of the Trump-Zelensky "great meeting" is available here.
The Goldman Sachs European Defense Index fell by roughly 2% on Monday following overnight developments.
Larger timeframe.
Since Russia invaded Ukraine in early 2022, the GS European Defense Index has delivered outsized annual returns.
UBS analyst Tricia Wright commented on the moves:
"Defense stocks were among the top fallers in Europe after the Trump-Zelensky meeting. The Italian defense group Leonardo declined by 4.4%, topping the STOXX Europe 600 fallers list, while Germany's Rheinmetall and Hensoldt were both down by about 3%. Talks to end the Ukraine war on Sunday spurred fresh optimism from U.S. President Trump, yet there are no clear signs that the two sides have reached a breakthrough, as Russia continues to push for land gains and reject a ceasefire," The Wall Street Journal reported.
Even as a potential peace deal in Eastern Europe nears, we expect defense stocks to remain elevated given record defense spending.
UN Secretary-General António Guterres recently wrote in a report on the rise in military expenditure: "The world is spending far more on waging war than on building peace."
Tyler Durden
Mon, 12/29/2025 – 08:05