Peace Hopes Add to Valuation Question for Europe’s Defense Rally
Stacks of 155mm artillery shells stored at a production site in Tarbes, France.
Photographer: Lionel Bonaventure/AFP/Getty ImagesA sharp fourth-quarter pullback in Europe’s defense stocks has shone a spotlight on the shifting narrative for what’s been a key driver of the region’s equities rally this year.
Recent signs of movement in Ukraine peace talks have cooled investor sentiment, with a Goldman Sachs Group Inc. basket of the region’s defense shares about 19% below an October peak. It’s still up 87% in 2025, after more than tripling in the three prior years.