European defense shares drop to lowest levels since September
European defense stocks fell to their lowest levels since early September on Friday, following comments from Ukrainian President Volodymyr Zelensky expressing willingness for “honest” work on a U.S.-backed plan to end the war.
An index tracking aerospace and defence companies fell 2.6% and was on course for its largest weekly decline since mid-October, News.Az reports, citing Reuters.
The index had surged more than 200% since Russia launched its war against Ukraine in February 2022.
Shares in Germany's Renk fell around 6%, on track for a sixth straight day of losses.
Hensoldt and Rheinmetall were both down around 4%.
Italy's Leonardo, Sweden's Saab slipped between around 2% and 3%.
JPMorgan analysts wrote in a note earlier this week they saw the plan as not acceptable to Ukraine or its European allies, and viewed the recent selloff in defence companies as a "compelling entry point" into the sector.
"If the U.S. is able to impose this plan (which is unlikely, in our view) we think it would amount to a de facto victory for Russia, driving European defence spending even higher than planned and at a much faster pace," they wrote.
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