But analyst Loredana Muharremi says the market reaction is “overstated”. “European defence valuations are anchored in structural budget increases rather than short-term Ukraine revenue, and rearmament plans are unlikely to reverse even in the event of a peace agreement,” writes Muharremi in a Nov 24 note.
The White House says US President Donald Trump is “optimistic that a deal can be struck” to end Russia’s war in Ukraine following talks in Geneva, Switzerland. US and Ukraine negotiators have reportedly drawn “an updated and refined peace framework”, removing some of Russia’s demands from the original 28-point draft proposal, and Trump is pushing for Ukraine to accept the terms by Thanksgiving on Nov 27.
Reports of the US-driven peace deal triggered a downturn in European defence stocks, with names under Morningstar Equity Research’s coverage down between 10%-20% since October highs.
