European Stocks Surge Amid Defence Sector Rally on Trump Presidency

Europe's main stock index experienced its largest gain in six weeks, driven by a surge in defence stocks due to anticipated increased military spending under Donald Trump's U.S. presidency. Key economic reports are expected from Europe this week, affecting investor sentiment and market movements.

In a significant market movement, Europe's primary stock index surged to its best performance in six weeks on Monday, primarily led by a sharp increase in defence stocks. This uptick comes amid expectations of heightened military expenditure in Europe during a Donald Trump-led U.S. presidency, coupled with investor anticipation for crucial economic data scheduled for release this week.

The pan-European STOXX 600 climbed 1.1%, marking a positive close across most sectors and regional markets. This boost follows a three-week decline as investors evaluated the potential imposition of tariffs after Trump's re-election victory. Contributing to earlier market declines were China's inadequate efforts to rejuvenate its struggling economy.

European defence stocks saw an influx of investment as Trump signaled a potential reduction in U.S. military support for Ukraine and urged NATO members to increase their defence spending. Susannah Streeter of Hargreaves Lansdown highlighted the likelihood of enhanced financial commitments to NATO, potentially leading to increased military contracts. Meanwhile, Wall Street's record-breaking rally further brightened the European market outlook.

(With inputs from agencies.)