FRANKFURT (dpa-AFX) – Shares in the defense sector could be in demand on Monday, bucking the general downward trend across European stock markets. In pre-market trading on Tradegate, Rheinmetall, Renk, and Hensoldt rose between 5 and 9 percent. TKMS gained 1.6 percent. Defense stocks are considered potential beneficiaries of the escalation in the Middle East.
"The attacks by the US and Israel on Iran and the subsequent retaliatory strikes are likely to focus investors' attention on missile defense systems," wrote analyst Charles Armitage of Citigroup. In addition, the US is expected to increase its defense spending. He cited, among others, the Iris-T SLM systems produced by Diehl and Hensoldt, as well as the Skyranger system from Rheinmetall.
Across Europe, the defense sector is expected to be in demand on Monday. Shares in BAE Systems, for example, rose by more than 7 percent in pre-market trading this morning. With 50 percent of its revenue generated in the US, the broadly diversified weapons manufacturer would benefit most among European producers from increased US defense spending, according to Armitage./bek/mne/stk
