(Bloomberg) — Defense stocks rose across Europe and Asia after US President Donald Trump said NATO nations should shoot down Russian aircraft that violated their airspace and struck a more sympathetic tone on Ukraine’s chances of winning the war.

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A Goldman Sachs Group Inc. (GS) basket of European defense firms rose as much as 2.8%, with industry heavyweight Rheinmetall AG (RHM.DE, RNMBY) gaining 1.4% and the UK’s BAE Systems Plc (BA.L, BAESY) rising 1.6%. Sweden’s Saab AB (SAAB-B.ST, SAABY) climbed as much as 5.8% to a record high.

In Asia, South Korean names led regional gains. Shares of Hanwha Aerospace Co. (012450.KS), the nation’s biggest defense contractor, surged as much as 5.9% to an all-time high. The company has held talks with some Western European countries about helping them expand their arms-making capacity. Korea Aerospace Industries Ltd. (047810.KS) and Hyundai Rotem Ltd. rose at least 4% each.

Japan’s IHI Corp. (IHICY, IHICF) climbed almost 10% to be among the top-performing stocks on the Topix gauge, while Mitsubishi Heavy Industries Ltd. (7011.T, MHVYF) rose more than 5%. Australia’s DroneShield Ltd. (DRSHF) surged over 7%.

The defense sector has been a hot trade in stock markets globally as rising geopolitical tensions around the world as well as expectations of expanding military budgets boosted investor interest. The MSCI World Aerospace & Defense Index is up 51% in 2025, eclipsing an advance of nearly 17% in a broader gauge of global equities.

“The comments from Trump signal that geopolitical risks are back in the spotlight and this is driving defense stocks higher,” said Jung In Yun, chief executive officer at Fibonacci Asset Management Global Pte. “With tensions showing no signs of de-escalation, the expectation is that order books of defense firms will be full for the next few years.”

—With assistance from Youkyung Lee.

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