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TotalEnergies closed 4.4 percent higher in Paris on Monday, touching a record 73 euros intraday, while French defense names including Thales and Dassault Aviation spiked as much as 6 percent at their peaks before paring most of those gains by the bell. The session captured a broader dynamic playing out across European markets: energy and defense are the only sectors still attracting capital in a week defined by cruise missile trajectories and closed airspace, and Europe’s defense industrial base has never been better positioned to absorb the inflows.
TotalEnergies: The Numbers Behind the Candle
TotalEnergies closed at 70.28 euros on Monday, up from Friday’s 67.28. The stock traded as high as 73.00 euros intraday, an unprecedented peak that also marked the top of its 52-week range. Volume hit 7.58 million shares against a 20-session average of 4.07 million, meaning nearly twice the usual liquidity flowed through the name in a single session. At the close, the company’s market capitalisation stood at approximately 170 billion euros, making it the largest constituent of the CAC 40 at 7.2 percent of the index, slightly above LVMH at 7.1, as MarketScreener noted. Since January 1, the stock has gained 26.6 percent.
The move was not isolated. Norwegian producers Equinor and Var Energi gained 8 and 6 percent respectively. Shell and BP both advanced in London. The catalyst was straightforward: Brent crude jumped nearly 8 percent to 79.19 dollars per barrel after an Iranian Revolutionary Guard commander declared the Strait of Hormuz closed, as the Associated Press reported. Roughly one fifth of global oil and liquefied natural gas transits the strait. Stephen Innes of SPI Asset Management described it as the aorta of the global energy system. A prolonged closure would have consequences for every asset class, everywhere.
For TotalEnergies specifically, the dividend yield now sits at 5.05 percent, and 13 of 14 covering analysts rate the stock a buy. JPMorgan analyst Matthew Lofting upgraded the stock from Neutral to Overweight on Monday, having already raised the price target to 63 euros from 58 on February 25. The stock blew through that target by ten euros in a single session.
French Defense: A Six Percent Morning That Became a One Percent Close
Thales gained as much as 6.1 percent during Monday’s session, with Dassault Aviation up 3.5 percent at its peak. By the close, the picture looked different. Thales settled at 256.90 euros, a gain of less than one percent from Friday’s 254.90. CNBC’s closing wrap confirmed that European defense stocks finished mixed, with earlier gains substantially pared across the board. Britain’s BAE Systems held on to a 6 percent gain. Italy’s Leonardo closed up nearly 3 percent. Germany’s Renk added 3 percent. Sweden’s Saab, which had surged 6.1 percent alongside Thales at the open, finished the day 0.5 percent lower.
Thales reports full-year earnings on Tuesday, March 3, which may have contributed to the afternoon reversal as traders opted to reduce exposure ahead of the numbers. Citi analyst Charles Armitage noted that companies and multinational projects involved in air defense systems are likely to attract sustained investor interest, singling out the Sky Shield Initiative, which involves 22 countries and companies from Germany, France, Norway and the United States. Thales jointly produces the SAMP/T ground-based air defense system with MBDA, a programme that has gained renewed relevance as the US-Israeli strikes on Iran enter their third day.
Jens-Peter Rieck of MWB Research told Bloomberg that the market will take the conflict as broadly positive for European defense stocks, though he cautioned that any move is likely driven more by sentiment than by changes to earnings estimates. That distinction matters. Monday’s surge-and-fade pattern in names like Thales and Saab suggests the market agrees: the war premium is real, but the earnings case was already priced in.
Europe’s Defense Supercycle Is Not a Monday Trade
The broader context for European defense equities goes well beyond a single session’s reaction to Iranian retaliation. The STOXX Europe Total Market Aerospace and Defense Index has rallied more than 260 percent since Russia’s invasion of Ukraine in February 2022 and posted a 13.5 percent gain in the first two weeks of January alone, its strongest opening on record, according to Morningstar. Key stocks like Saab and Rheinmetall opened the year with gains of more than 20 percent before Friday’s strikes added another layer of geopolitical risk premium. Events surrounding Venezuela, Greenland and now Iran have accelerated talk of what analysts are calling a defense supercycle.
The structural driver is fiscal, not sentimental. The European Commission’s ReArm Europe plan, formally titled Readiness 2030, aims to mobilise up to 800 billion euros in defense spending over four years. The plan operates through two channels. First, it activates the national escape clause of the Stability and Growth Pact, allowing member states to increase defense budgets without triggering the Excessive Deficit Procedure. If all 27 EU members raise spending by 1.5 percent of GDP, the Commission estimates this would create nearly 650 billion euros in fiscal space. Second, a new loan instrument called Security Action for Europe provides up to 150 billion euros in joint borrowing for defense investment, adopted by the Council of the EU in May 2025.
NATO raised its defense investment target at The Hague Summit to 3.5 percent of GDP by 2035, with an additional 1.5 percent for infrastructure and resilience. For the 23 NATO members that are also EU countries, meeting the new target would require an additional 254 billion euros in annual spending. In practice, national budgets are already moving. Germany has allocated 377 billion euros for military procurement under its 2026 budget in pursuit of what Berlin calls the strongest conventional army in Europe. France pledged to double its defense budget by 2027 compared with 2017 levels, committing 64 billion euros. Poland’s 2026 draft earmarks nearly 55 billion dollars, its largest allocation ever.
The Companies Capturing the Spending
Germany’s Rheinmetall, now Europe’s largest defense firm by market capitalisation, has gained approximately 200 percent since January 2025. Morningstar still rates the stock undervalued in four-star territory despite a 22 percent rise year to date, with analyst Muharremi identifying the company as best placed for ammunition and land systems capacity expansion. Rheinmetall acquired US vehicle components maker Loc Performance Products for 950 million dollars and partnered with drone specialist Anduril to develop attack systems. Safran, France’s engine and avionics specialist, purchased AI surveillance firm Preligens for 220 million euros. German startup Helsing raised 600 million euros in Series D funding. The sector’s M&A pipeline reflects confidence that order backlogs, now stretching into the 2030s for most major contractors, will convert into sustained revenue growth.
Bernstein’s defense team emphasised stock selection over broad sector exposure given elevated valuations. BAE Systems, Thales, Rheinmetall and Dassault Aviation remain the house’s core European picks. Daniele Antonucci, chief investment officer at Quintet Private Bank, said governments are directing capital toward infrastructure, defense and strategic sectors, and that together these policies create the most supportive backdrop for growth in years. Global defense spending is on pace to reach 2.6 trillion dollars in 2026, an 8 percent year-on-year increase. For TotalEnergies and the French defense sector, Monday was a repricing event. For European defense equities as a whole, it was one more datapoint in a multiyear structural reallocation that shows no sign of reversing.
