Live Markets: Short covering helps propel defence stocks back toward record highs

MTU Aero Engines AG

05/08/2026 11:46

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SHORT COVERING HELPS PROPEL DEFENCE STOCKS BACK TOWARD RECORD HIGHS

     European aerospace and defence stocks have extended their powerful recovery, with the STOXX Aerospace & Defence index .SXPARO now up almost 30% from the one-year lows hit in May and sitting just a whisker below January's record highs.
Citi's positioning data offers a clue as to what has helped fuel the surge, showing that while investors remain overwhelmingly bullish, a reduction in short positions has given the rally a helping hand.
"European A&D remains consensus long crowded post results, with positioning improving both w/w (week-on-week) and m/m(month-on-month), supported by cuts in short positioning across the group," Citi's Rodrigo Campo writes.
The bank noted that defence names had a better week in relative terms, with several stocks seeing cuts in short crowding, most notably Babcock BAB.L and QinetiQ QQ.L. 
Dassault Aviation AM.PA was the main negative mover, likely reflected profit-taking after strong gains over the previous three weeks, it says.
Elsewhere, Hensoldt HAGG.DE saw short positioning continue to build from the previous month, while MTU Aero Engines MTXGn.DE and Melrose MRON.L remained heavily short despite broadly stable positioning. 
Renk R3NK.DE stood out as the only "consensus short", with Citi saying positioning had become more bearish again.
The consensus longs include Rolls-Royce RR.L, BAE Systems BAES.L, SAAB SAABb.ST, Rheinmetall RHMG.DE, Thales SAABb.ST and Leonardo LDOF.MI, according to the bank.
(Danilo Masoni) 
 
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EARLIER LIVE MARKETS POSTS:
EURO ZONE ECONOMIC SURPRISES AT A MULTI YEAR HIGH, A BUY SIGN CLICK HERE
STOXX MUTED BUT STILL SETTING NEW RECORDS CLICK HERE
EUROPE BEFORE THE BELL: HOW HIGH CAN WE GO? CLICK HERE
MORNING BID: SEMIS FLY AGAIN AS AI CAPEX SHOOTS THE MOON CLICK HERE
     
     
     
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