Global defense stocks soar as U.S. strike on Venezuela heralds new 'hard power' era

• European defense stocks rose sharply with Rheinmetall up over 7%, Hensoldt up nearly 7%, and Leonardo gaining 5.8%, while Asian defense stocks like Mitsubishi Heavy Industries jumped almost 10%
• Fulcrum Asset Management's CIO describes the Venezuela operation as a 'signaling exercise' invoking the Monroe Doctrine, representing a fundamental shift from previous U.S. foreign policy approaches
• The gains reverse recent sector weakness amid Ukraine-Russia peace prospects, with analysts expecting sustained increases in defense spending and military rearmament globally in response to the new geopolitical environment

Summary: Defense Stocks Surge Following U.S. Venezuela Strike

Market Performance:

Global defense stocks rallied sharply on Monday following the U.S. military operation that removed Venezuelan leader Nicolas Maduro. European defense manufacturers led gains, with Germany's Rheinmetall surging over 7%, while Hensoldt and Italy's Leonardo each rose approximately 5.8%. Swedish fighter jet maker Saab climbed nearly 5%. In Asia, Japan's Mitsubishi Heavy Industries jumped almost 10%, followed by IHI at 9.2% and Kawasaki Heavy at 6.9%. South Korea's Hanwha Aerospace gained over 6%.

Key Themes:

Fawaz Chaudhry, CIO at Fulcrum Asset Management, characterized the Venezuela operation as a "signaling exercise" marking a shift toward a "hard power" era in geopolitics. President Trump's invocation of the Monroe Doctrine signals more assertive U.S. foreign policy through military assets rather than diplomatic means.

Market Implications:

Analysts expect the geopolitical shift will drive increased military spending and rearmament programs across Europe and Asia long-term. This represents a significant reversal for European defense stocks, which had recently declined amid prospects of a Ukraine-Russia peace agreement.

Sector Outlook:

The defense sector is positioned for sustained growth as nations respond to the more aggressive geopolitical environment. Increased military budgets and procurement programs are anticipated across multiple regions, benefiting major defense contractors and military technology specialists.

The market reaction suggests investors view this event as a catalyst for a prolonged defense spending cycle rather than a temporary rally.