May Belongs to Defense: Arms Stocks Poised to Skyrocket Following the Unlocking of the EU’s SAFE Program
The defense sector is once again becoming the darling of European trading floors. After a brief period of capital rotation toward other sectors, investors have forcefully turned their attention back to defense equities. The main catalyst for the May stock market rallies is the signing of contracts under the massive EU program SAFE (Security Action for Europe) by European capitals, led by Poland. Analysts have no illusions: billions of euros pumping up orders herald a “golden era” of stable revenues, and shares of European defense leaders are posting double-digit gains session after session.
⚡ News in a Pill
- The stock market defense sector is on an incredible streak in 2026. In recent days alone, shares of leaders like Germany’s Rheinmetall or Britain’s BAE Systems recorded single-session surges of 12–14%.
- A key “bullish” signal for the market is the launch of the EU’s SAFE fund (totaling €150 billion). In May, Poland became the first to sign an agreement guaranteeing nearly €44 billion for defense investments.
- Defense company valuations are currently 20% to 30% higher than the market average, and analysts expect this trend to continue.
- Specialized European Aerospace & Defense ETFs have become an investment hit, recording massive capital inflows and double-digit returns.
The SAFE Program Changes the Rules of the Capital Market Game
The long-standing debate in Europe about the need to significantly increase defense budgets has definitively ceased to be just a theory. Financial markets enthusiastically welcomed the May reports about member state governments unlocking massive funds under the EU’s SAFE financial instrument. This program, unlike mere political declarations, truly secures liquidity—the commission has made a total of €150 billion available, and the agreements signed by countries like Poland mean immediate investments in local subcontractors.
What does this mean for the stock exchanges? Capital always seeks security and guarantees. The defense industry, whose order books have been cemented for years to come with EU and government capital, has created real stars on the trading floors. The German giant Rheinmetall grew by 14% and 3% respectively during the Monday and Tuesday sessions in May (reaching over €960 per share). Huge surges of 11–13% were also recorded by France’s Thales and Italy’s Leonardo.
How to Play the Defense Bull Market? Specific ETFs
For active investors and day-traders, the coming weeks are the best time for precise capital positioning. Investments supported by the SAFE mechanism are spread over time, which is why the current gains have the potential to take the form of a long-term bull market.
However, not every investor wants to risk buying shares of individual companies (e.g., ThyssenKrupp or BAE Systems). The market quickly responded to this issue by offering specialized European defense ETFs, which are currently gaining momentum on the stock exchanges. An excellent example of investing in this trend is the pioneering WisdomTree Europe Defence ETF, which absorbed over half a billion euros in capital shortly after its launch. Another proven instrument targeting the Aerospace & Defense sector (strictly companies where over 50% of revenue comes from defense) is the massive VanEck Defense UCITS ETF (Ticker: DFNS), boasting over $8 billion in Assets Under Management (AUM).
Buying shares of such a fund is a classic way to “play the broad market”—instead of looking for a single winner of the SAFE program, the investor buys an entire, rapidly appreciating basket of European security tycoons.
