EU defense stocks under pressure amid Ukraine peace talks, Leonardo plummets

(Il Sole 24 Ore Radiocor) - The European defense sector is under pressure, with the US administration's renewed commitment to ending the Russian-Ukrainian conflict. Attention is focused on Friday's meeting in Alaska between US President Donald Trump and his Russian counterpart Vladimir Putin, during which they will discuss a possible peace solution to Russia's war of aggression against Ukraine, which has now been going on for nearly three and a half years. Investors are therefore banking on profits, given the strong performance achieved over the past year, while awaiting future geopolitical developments.

At the Milan Stock Exchange, Leonardo-Finmeccanica is suffering losses, sliding to the bottom of the FTSE MIB , despite having gained more than 71% since the start of the year. Elsewhere in Europe, Thales (-1.31%) in Paris, after losing over 4% at the start, and BAE Systems (-2.04%) in London are down. Profit-taking continued at Rheinmetall (-5.29%) in Frankfurt, following last week's slide following the release of second-quarter financial data. The results showed lower-than-expected revenue and operating profit, as well as a slowdown in order intake, amid the defense sector's boom. Many analysts point out that this slowdown could be exacerbated by the impact of a possible truce in Ukraine.

Nonetheless, volatility in the sector's stocks remains high, with investors remaining highly sensitive to the international scenario. While the prospect of a detente in Ukraine is gaining momentum , tensions in the Middle East continue to rise. Following the Israeli Security Council's approval of the plan for the ground occupation of Gaza, the German federal government, through Chancellor Friedrich Merz, announced that, until further notice, exports of weapons that could be used in the Strip will not be authorized.