Defense Shares Rally Amid Rising Tensions in Ukraine

3-line summary

• European defense shares rallied Friday morning (as of 08:52 GMT): Rheinmetall +4.4%, Saab +3.5%, Leonardo +3.9%, Thales +2.6%, BAE Systems +1.8%, and Germany's Hensoldt about +6%. The rally came as European leaders gathered in Brussels to back President Zelensky while President Trump sharpened criticism of Kyiv, raising doubts over continued US military and intelligence support.
• Context on rising tensions: allies worry the US could scale back intelligence-sharing and arms support; Trump criticized Ukraine's strikes on Russian refineries for pushing up global oil prices ahead of the midterms, and said last weekend the two sides had agreed to halt strikes on each other's energy facilities — but Kyiv said it withdrew from that and struck a refinery southeast of Moscow. A US official said sanctions relief for 'shadow fleet' vessels carrying Russian oil is under consideration.
• Ukraine's finance minister said next year's budget has a $32.6 billion funding gap, not including about $40 billion in direct military aid from allies; the Dutch prime minister complained few countries have pledged new financial support. A Russian drone attack killed three people in Kharkiv and cut power to 370,000 households in the Volyn region, prompting Kyiv to introduce emergency power restrictions. Russia, in retaliation for EU support to Ukraine, placed assets of French, German, Swedish, and Dutch companies in Russia under temporary administration. Zelensky said Ukraine needs air defense and funding heading into winter; Putin said Ukraine's refinery strikes caused 'nothing particularly significant.'

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