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Global defense stocks saw a notable rally after U.S. President Donald Trump made a striking departure from his earlier position, stating that Ukraine has the ability to retake territory currently occupied by Russia. The announcement, delivered in a post on Trump’s Truth Social platform, immediately fueled optimism in defense markets worldwide.

Trump wrote that with continued support from NATO allies and the European Union, Kyiv is now “in a position to fight and WIN all of Ukraine back in its original form.” His comments marked a sharp shift from previous suggestions that Ukraine might need to concede some of its land during peace talks.

Trump’s statement also included harsh words for Moscow, describing Russia as a “paper tiger” weighed down by economic struggles caused by the prolonged conflict. The president added that his view was shaped by a deeper understanding of the military and economic positions of both nations.

Market Reactions Across Regions

The impact of Trump’s remarks was quickly reflected in stock markets. European defense companies were among the top gainers on the Stoxx 600 index. German tank parts maker Renk jumped more than 6.5%, Italian defense group Leonardo and Swedish giant Saab each gained over 3.5%, while German defense electronics specialist Hensoldt climbed 5.8% by mid-afternoon in London.

Christian Ladurner, Chief Financial Officer at Hensoldt, said the momentum underscored the growing recognition that Europe must prepare for ongoing tensions. “The developments of the past two days are very encouraging for Europe. We see that the U.S. is increasingly acknowledging the reality of this conflict,” he told CNBC.

In Asia, defense stocks mirrored the trend. South Korea’s Hanwha Aerospace, Korea Aerospace Industries, and Hyundai Rotem all rose between 2% and 5%. Investors viewed Trump’s comments as a sign of continued Western military commitment to Ukraine, which could drive defense spending in both Europe and Asia.

U.S. defense giants also benefited. Lockheed Martin, RTX (formerly Raytheon Technologies), and Northrop Grumman each rose more than 1%, while Boeing added around 0.3%. The uptick highlighted investor expectations of sustained defense contracts and global demand for advanced military technology.

Geopolitical Reactions

Ukrainian President Volodymyr Zelenskyy welcomed Trump’s renewed support, thanking him for his “strong cooperation” and emphasizing the importance of U.S. leadership in ending the war. “Trump clearly understands the situation and is well-informed about all aspects of this war. We highly value his resolve,” Zelenskyy said on social media platform X.

Moscow’s reaction was more cautious. Kremlin spokesperson Dmitry Peskov noted that President Vladimir Putin “highly values Trump’s willingness to help” with conflict resolution but firmly rejected Trump’s characterization of Russia as a “paper tiger.”

The geopolitical shift comes at a time when NATO has reported increased Russian incursions into allied airspace, including over Poland, Romania, and Estonia. Trump went further in separate comments, urging NATO members to directly intercept and, if necessary, shoot down Russian aircraft violating their airspace.

Outlook for Defense Sector

Trump’s sharper rhetoric has added fuel to an already robust defense sector. With global defense spending expected to surpass $2.3 trillion by 2026, according to industry forecasts, defense firms are positioning themselves to capture surging demand.

Analysts note that Trump’s comments could strengthen market expectations for long-term NATO commitments, ensuring steady defense contracts in both the U.S. and Europe. Meanwhile, Asian defense firms are increasingly benefiting from regional security concerns, with South Korea emerging as one of the fastest-growing arms exporters globally.

While it remains uncertain how this new tone from Trump will translate into concrete policy, markets have already responded with optimism, signaling investor confidence in continued military support for Ukraine and an expanded role for defense contractors worldwide.