By European stock markets declined on Wednesday, with the STOXX 600 index down around 0.5%, as investor focus shifted sharply toward defensive plays after U.S. President Donald Trump altered his rhetoric on Ukraine.
Financial stocks led the downward pressure. Major banks across Germany, the U.K., and France—including Deutsche Bank, Barclays, and Société Générale—each lost more than 1%. The financial services subindex fell ~1.1%.
In contrast, defense and aerospace stocks saw strong rallies. The European defense index rose ~0.8%. Among top movers, Saab jumped about 4% after reports emerged that Germany might acquire its Global Eye surveillance aircraft. Hensoldt also gained ~4%. Leonardo, Renk, Thales, and Dassault Aviation posted steady gains.
Trump’s remarks were a clear pivot: he publicly stated he believes Ukraine can retake all territory occupied by Russia and urged Kyiv to act now — signaling potential escalation in Western support.
However, sentiment remains fragile. The broader market is still wrestling with uncertainty over monetary policy, inflation, and growth fundamentals, particularly as U.S. and European central banks remain cautious.
Going forward, the market landscape will be shaped by:
- Further statements and actions on Ukraine
- Macro indicators (inflation, PMI, trade)
- Central bank tone and future rate paths
- Sector earnings, especially in financials and defense
While defense names currently shine, whether that strength can be sustained depends on how geopolitical developments align with macro and policy trends.