Rheinmetall Joins Euro Stoxx 50 as Europe's Defense Stocks Surge

Rheinmetall, the German defense contractor, has seen its stock price skyrocket to EUR1,848, reflecting a remarkable increase of over 200 percent since the beginning of the year. The company's impressive performance has garnered it a place in the Euro Stoxx 50 index, effective June 20, 2025, replacing luxury brand owner Kering, which has faced a significant decline in stock value.

The inclusion of Rheinmetall marks a notable shift in the index, making it the sole defense company among prominent members such as Safran and Airbus. This rapid ascent in Rheinmetall's stock price comes amidst a broader rally in defense stocks, a trend that has intensified following geopolitical tensions, particularly since Russia's invasion of Ukraine in February 2022.

In May alone, Rheinmetall's shares surged by 26 percent, propelling the company's market capitalization to nearly EUR87 billion. This leap in value allowed Rheinmetall to surpass more than half of the existing companies listed in the Euro Stoxx 50 on the last trading day of May. The index's adjustments to include rapidly growing companies can lead to increased investment from index-tracking exchange-traded funds (ETFs), which are designed to mimic the performance of the index.

In contrast, Kering has struggled, with its stock price decreasing by approximately 27.6 percent this year, reflecting a near 50 percent drop over the past year. The luxury brand has been adversely affected by weaker sales in its flagship subsidiary, Gucci.

This significant shift in the index composition highlights the changing dynamics within the European stock market, where defense companies are increasingly gaining prominence amid ongoing global tensions. The robust performance of Rheinmetall serves as a testament to the escalating demand for defense products and services, positioning the firm as a key player in the evolving landscape of the European economy.