The attack on Venezuela, the threat to seize Greenland, and the pledge to raise the defense budget to $1.5 trillion have sent shares skyrocketing
Global defense stocks rallied at the start of the year against the backdrop of multiple belligerent actions taken by US President Donald Trump.
Shares have experienced steady growth over the past week, gaining more than 10% on average. The most impressive performance has been from European military-industrial giants like Saab and Rheinmetall, which gained around 25% and 20.5%, respectively.
The market value of defense companies spiked again on Thursday after Trump called for a massive 50% increase in US defense spending to $1.5 trillion in 2027, which he claimed was necessary to build a “dream military.”
Market analysts have attributed the rapid growth of defense companies’ value to geopolitical tensions and the actions of the US president in particular.
“Geopolitics is the inescapable story of 2026 thus far,” Neil Wilson, British investor and strategist at Saxo Bank told Reuters. “Clearly defense stocks are the play – along with rare earths.”
Last weekend, Trump launched a surprise attack on Venezuela, kidnapping its leader Nicolas Maduro and his wife. The couple has been transferred to New York and slapped with assorted criminal charges, including drug trafficking. Maduro has pleaded not guilty, describing himself as a “prisoner of war.” Meanwhile, Trump has vowed to keep the country and its oil market under control for the time being.
The operation in Venezuela was followed by a flurry of threats from Trump and other top officials against other nations in the region, including Cuba and Columbia. The US also made new threats against Iran, which has been gripped by anti-government protests sparked by a sharp drop in the national currency.
Moreover, the Trump administration has renewed its claims on Greenland, an autonomous region of fellow NATO member Denmark. Washington says it needs to own the island to ensure “security” in the Arctic and counter an alleged threat posed by Russia and China. That requirement has been vocally rejected by the Danish and Greenlandic governments, as well as multiple European NATO nations, which expressed concern over the fate of the US-led bloc should Trump seize the island by force.
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