Arms boost Italian markets. Piazza Affari outperformed most major European markets in H1 2025, driven by substantial gains in defence-linked companies.
- NATO- and EU-backed military investments are lifting industrial stocks, with Milan benefiting from its heavy exposure to defence-sector blue chips.
By the numbers. FTSE MIB: +16.4% YTD, second only to Germany’s DAX (+18%).
- Closed June with a +0.1% gain, hitting its highest level since 2021.
- Leonardo (+2.5%) and Iveco (+2.6%) rallied on defence momentum.
- Fincantieri surged +4.6%, boosted by potential €20B in new contracts, and possible involvement in President Donald Trump’s US naval shipbuilding revival.
The context. Europe’s military spending boom, backed by EU funds and national orders, is propelling the defence industry.
- Italian defence firms, long-standing players in the sector, are back in the investment spotlight.
Zoom out. Macroeconomic uncertainty persists.
- Inflation is cooling in Europe but remains above target in Italy (+1.7% in June).
- US markets tread cautiously ahead of inflation data and possible rate cuts.
Not just Italy. Shares of AVIC Chengdu Aircraft jumped 10% on June 30, amid a Chinese defence rally and rumours of J-10 fighter jet sales to Iran, replacing delayed Russian Su-35s.
- Tehran’s interest isn’t new: in November 2024, a photo of Iran’s defence minister in a J-10 went viral.
- China and Iran reportedly discussed it at last week’s SCO summit.
What we’re watching. Italy’s defence positioning could continue to support Piazza Affari in H2 2025, especially if geopolitical tensions persist and public spending on strategic industries remains strong.
