Defense and cybersecurity stocks are seeing a sharp rise in values as investors take note of pledges by the EU to boost defense spending and governments warn of an increased threat of cyber intrusions following Russia’s invasion ofUS stock markets seesawed again on Monday as the war in Ukraine escalated. Most of the major US markets closed lower after regaining some of their losses, but defense contractors continued to gain as investors bet their businesses would benefit from the conflict.
The jump in defense stocks comes after German Chancellor Olaf Scholz said that defense spending in Europe’s biggest economy will be increased to 2% of gross domestic product, from an estimated 1.5% in 2021. But defense analysts have also raised concerns that some companies, including Raytheon, also supply Russian civil use aircraft makers. In a speech last week, Joe Biden said his administration’s actions and those of allies aimed to “cut off more than half of Russia’s hi-tech imports, and we’ll strike a blow to their ability to continue to modernize their military”.
“I think we’re going to see more of split focus around counter-Russia in Europe in the short term and countering China in the Pacific in the long term.”