FRANKFURT (dpa-AFX) - Investors continue to capitalize on the recent weakness in defense stocks as an entry point. On Tuesday, Rheinmetall shares climbed 5.1 percent, extending their recovery after having slumped by as much as 30 percent year-to-date, briefly ranking among the DAX's worst performers in 2026. From their record high of over 2,000 euros reached in October, the shares had lost up to 45 percent of their value.
The recovery was also joined with momentum on Tuesday by shares of Hensoldt, Renk, and TKMS, which gained between 5.6 and 8.8 percent. Generally, stocks that had recently been sold off were in demand, including many software titles. Conversely, profit-taking hit sectors such as chips, chemicals, and solar technology, which had been characterized by a recent rally.
The confrontation with Russia in the Ukraine war, where no progress is being made, remains the decisive factor for the European defense sector. The Russian military again reported a large-scale Ukrainian drone attack overnight. On Sunday night, a massive Ukrainian drone strike caused damage in Moscow's suburbs for the first time.
Analyst Chloe Lemarie of Jefferies Research commented this morning that recent news flow suggests the war dynamics are shifting in favor of Ukraine. Meanwhile, regarding the recent price declines, she emphasized that developments in the war had already ceased to be a major driver for the sector lately. Valuation levels have been significantly reduced, thereby lowering the downside volatility risk.
Focus now shifts to Kremlin leader Vladimir Putin's visit to China - just days after US President Donald Trump was received there. The discussions are likely to cover the wars in Iran and Ukraine./tih/jsl/jha/
