The shares of Rheinmetall, a major German armament company and one of the largest weapons producers in Europe, have seen a significant surge, rising by about 25% over the last three working days to reach around 900 euros on the Dax 40 in Frankfurt. This sudden increase came after the new US administration urged the European Union to boost its defense spending. By 14:00 local time, or 13:00 GMT, the price had jumped almost 8.5% higher than Friday’s close, hitting 883.60 euros and surpassing analyst expectations.
Other companies in the defense sector, such as Hensoldt and Renk, have also seen benefits from the current geopolitical climate. The administration, led by Donald Trump, has signaled that changes are coming to the transatlantic security architecture, with a demand for the EU to take more responsibility for its own defense. Most European countries, however, have expressed that increasing military spending to 5% of their GDP, as requested by Washington, is not feasible. Nonetheless, significant investments in armaments are planned for the coming months and years.
Impact on the German Economy
A recent study by the Institute for the Labor Market and Professional Research (IAB) in Germany suggests that an increase in defense expenditure could help the German economy recover from its current stagnation, potentially creating up to 200,000 additional jobs. This development comes as several European leaders gather in Paris for an emergency meeting to address the situation following Washington’s intention to pursue direct contacts with Russia to end the Ukraine war without European involvement.
What is Rheinmetall
Rheinmetall, the leading German company in defense technology and security systems, has a long history dating back to its founding in 1889. Based in Düsseldorf, Germany, it is one of the main suppliers of military equipment in Europe, with operations and projects spanning over 20 countries. Rheinmetall’s product line includes the Leopard 2 tank, the Lynx infantry combat vehicle, and the Boxer multipurpose armored vehicle. The company also produces the PZH 2000 artillery system, a self-propelled howitzer considered one of the most advanced and precise in the world, as well as medium and large-caliber naval guns like the 127 mm Frigate cannon used in warships. Additionally, Rheinmetall manufactures small arms and personal defense systems, including the MG3 and MG5 machine guns used by the armed forces of several countries.