European bags oscillate between euphoria and caution: defense titles falling, but analysts see an opportunity to invest in the falls
Peace, the real one, does not fly with doves. Travel on combat jets, flies the borders with drones, leans on military satellites and, if needed, shields with missiles led by artificial intelligence. Other than olive twigs: in Ukraine, to silence the weapons, other weapons are needed. Those who will have to guarantee the truce on the Donetz basin.
And so, while the diplomacies are struggling to write press releases full of good intentions, in Washington we think in much more concrete terms: Donald Trump asked General Dan Caine to prepare a safety plan for allied troops. No American soldier on the ground, but a hunting network lined up on the borders, reconnaissance drones ready to supervise every square meter and a logistics capable of moving European men and means such as Amazon Prime packs. Peace, version 2025, works like this: a gigantic “military umbrella” that does not stop the rain, but the missiles.
Market reactions and economic paradox
The markets initially reacted as if the happy ending was around the corner. Tuesday the bags went up having an olive twig in the mouth. Thanks to the hypothesis of a meeting between Trump, Zelensky and Putin have touched new maximums. Milan exceeded 43 thousand share that he had not seen since 2007. At the same time the investors gave up the defense titles: Leonardo and Fincantieri down 10%, Rheinmetall at -4.9%, Saab to -7%. It seemed the end of the race, and instead it was only a stumbler. Because if peace comes, it must be defended. And defending means spending.
The new normality of military spending
The United States have already made it known that planes, satellites and drones will not skimp to watch over the fire on the ceased. Europe, for its part, will have to continue to open the wallet. And they do not think of the markets that suffice a joint press release to disarm the financial statements: the orders will arrive the same, and indeed, they could also accelerate. Japan also knows well, which has just announced a record request of 8.8 trillion of yen (about 60 billion dollars) for the 2026 defense. A signal that military spending, rather than a parenthesis of war, is now the new normality.
Opportunities and strategies
Analysts have no doubts: Leonardo (Target Price for 52 euros) and Fincantieri (16.4 euros) are well placed to ride the wave of European investments. Translated from financial jargon: the downward discounts are not a surrender, but a seasonal balance.
The paradox remains: peace is a goal, defense is a business. The doves will also continue to fly, but they will do it safe only if escorted by an F-35.
