Defense stocks rally as Trump, in a major shift, says Ukraine can win back territory from Russia

Global defense stocks moved higher on Wednesday after U.S. President Donald Trump, in a major rhetorical shift, said Ukraine could retake territory currently occupied by Russia.

In a post published overnight on his Truth Social platform, Trump said that Kyiv, with the support of the European Union and the NATO military coalition, “is in a position to fight and WIN all of Ukraine back in its original form.”

The EU and NATO have offered military and humanitarian support to Ukraine — which is not currently a member of either organization — since the start of Russia’s invasion in 2022.

Trump said his view came after “getting to know and fully understand” Russia and Ukraine’s military and economic situation, noting what he described as the “economic trouble” that the conflict is causing in Moscow. The White House leader also likened Russia to a “paper tiger” — a term that typically refers to a force that appears powerful, but is in truth ineffective.

The U.S. president has previously suggested Ukraine would need to be open to giving up some of its territory in peace talks, which Washington has taken steps to broker since the start of Trump’s second mandate.

In separate comments on Tuesday, Trump said NATO members should shoot down Russian jets entering its airspace, following a series of reported incursions in the Polish, Romanian and Estonian skies by Russian aircraft and drones in recent weeks.

Defense stocks were among the top performers on the pan-European Stoxx 600 index on Wednesday afternoon.

German tank parts maker Renk was last seen trading around 6.5% higher, while Italian defense firm Leonardo and Swedish defense giant Saab both rose more than 3.5%.

German defense firm Hensoldt was another top performer, up 5.8% at 3:30 p.m. London time.

Hensoldt Chief Financial Officer Christian Ladurner said Trump’s comments don’t necessarily change the overall situation for Europe’s defense industry, but that they rather reaffirm the sector’s warnings that Russian President Vladmir Putin will continue to test the bloc.

“I think, in general, we have to say that the developments we have seen in the last two days are very encouraging for Europe,” Ladurner told CNBC’s “Squawk Box Europe” on Wednesday.

“We see that the U.S. is more and more, I would say, seeing the reality, what is really happening and what has happened. So, this is encouraging for us,” he added.

In Asia, major South Korean defense stocks — including Hanwha Aerospace, Korea Aerospace and Hyundai Rotem — all posted gains of between 2% and 5% on Wednesday.

Stateside, U.S. defense stocks were also higher. Lockheed Martin, RTX and Northrop Grumman all traded more than 1% higher, while Boeing was up around 0.3%.

Ukrainian President Volodymyr Zelenskyy welcomed Trump’s Truth Social post, saying on social media that he was “grateful” for the U.S. president’s “strong cooperation.”

Trump “clearly understands the situation and is well-informed about all aspects of this war. We highly value his resolve to help end this war,” Zelenskyy said on social media platform X on Tuesday evening.

Russia — which has improved rapprochement with Washington in recent months — also responded to Trump’s tonal shift on the Ukraine war.

Kremlin spokesperson Dmitry Peskov on Wednesday said Putin “highly values Trump’s willingness to help” find solutions on Ukraine. Peskov disputed Trump’s labelling of Russia as a so-called “paper tiger,” however.