Defense equities across Europe and North America posted double-digit gains as major contractors reported record backlog levels and expanded production capacity. The rally reflects heightened military spending driven by regional conflicts and strategic realignments.
- Rheinmetall AG backlog exceeds €15 billion, up 37% YoY
- German Ministry of Defense awarded €2.8 billion contract for artillery systems
- Lockheed Martin secured $2.1 billion F-35 component contract with South Korea and Japan
- Northrop Grumman gained $1.4 billion for missile defense upgrades
- NATO countries collectively met 2% GDP defense spending target in 2025
- Global defense spending projected to grow 7.3% annually through 2028
Global defense stocks advanced sharply in early trading, led by German manufacturer Rheinmetall AG, which climbed 14.3% after announcing a €2.8 billion order for next-generation artillery systems from the German Ministry of Defense. The company's backlog now exceeds €15 billion, up 37% year-over-year, signaling sustained demand for high-mobility, precision-guided weaponry. The rally extends beyond Europe, with U.S. defense giant Lockheed Martin rising 9.6% after securing a $2.1 billion contract to supply advanced F-35 Joint Strike Fighter components to South Korea and Japan. Northrop Grumman also gained 8.2% on news of a $1.4 billion award for missile defense system upgrades to the U.S. Air Force. Analysts attribute the momentum to a confluence of long-term structural shifts. Europe's defense spending rose 12% in 2025, the highest annual increase since 2008, while NATO member states collectively exceeded their 2% GDP defense spending target for the first time since 2014. Combined with ongoing conflicts in Eastern Europe and the Indo-Pacific region, defense budgets are expected to grow by an average of 7.3% through 2028. Market participants are now focusing on supply chain resilience and domestic manufacturing incentives. Rheinmetall plans to open two new production facilities in Poland and Hungary by 2027, increasing its European output capacity by 40%. Similarly, Raytheon Technologies announced a $600 million expansion of its missile production line in Arizona, citing rising demand for hypersonic defense systems.