U.S. defense stocks fired higher today after President Trump’s “big shift” on the Ukraine war signaled the potential for more weapons sales.
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Lockheed Martin (LMT) was up 0.8% in early trading, RTX (RTX) was 1.2% higher and Northrop Grumman (NOC) was 1.7% higher.
Trump Cards
After his speech at the United Nations in New York on September 23 and subsequently a meeting with Ukrainian leader Volodymyr Zelensky, Trump surprised observers when he declared that Ukraine could win back territory lost to Russia since its invasion in 2022.
Trump has previously pushed for a peace deal with Russia potentially cementing in place and even adding to Russian gains on the battlefield. He infamously told Zelensky in a heated Oval Office meeting back in February that he “didn’t have the cards.”
However, following a meeting with Russian President Putin in Alaska which did not result in a peace deal and frustrations over Russia’s ratcheting up of attacks in Ukraine since then, Trump seems to have change course. Zelensky described it as a “big shift.”
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. Why not?”
Trump said he had gotten to “know and fully understand” Russia and Ukraine’s military and economic situation. He called Russia a ‘paper tiger’ – again a surprise given how much he has warmly described his relationship with Putin.
Defense Boost
This could mean an increase in the number of weapons manufactured in the U.S. supplied to Ukraine either directly or via European nations.
It could lead to more sales of Patriot missile systems made by Raytheon, part of RTX, as well as Lockheed Martin’s Javelin anti-tank missiles.
Lockheed has also been supplying PAC-3, THAAD interceptor missiles and HIMARS missiles, counter-battery radars, and guided rocket systems.
Elon Musk’s Starlink satellite system may also be a beneficiary.
This demand will come on top of orders coming in from Nato countries responding to Trump’s demand that they play a greater part in the alliance by increasing defense spending.
This should be quite the fillip for defence share prices going forward – see below:
Defence chiefs and Ukraine will be cautious however. The President is well-known for ‘shooting from the hip’ and then changing his mind.
His comments may also just be a way to put pressure on Russia to bring it quickly to the negotiating table.
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