Live Markets: EU Defence: investors want proof before paying up - MS
12/11/2025 12:07
Adds blog STOXX hits new record, up 0.6% US shutdown relief drives markets SSE plans investments for $44 bln Nasdaq futures up 0.6% Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com EU DEFENCE: INVESTORS WANT PROOF BEFORE PAYING UP - MS European defence stocks may need more than geopolitical headlines to fire higher. Morgan Stanley polled 117 investors last Friday and found appetite for further re-rating is limited, with valuations seen as the biggest hurdle. "Visibility on earnings upgrades has become the most popular driver for adding exposure," MS strategists say, as 32% flagged order momentum and guidance as key catalysts to add positions. Announcements on defence spending plans by countries instead ranked second at 26%, slipping from first place in March. Positioning has ticked up, with 57% now overweight versus 37% in March, while zero exposure fell to 18% from 28%. Yet, high valuations remain the top constraint for 39% of investors, up from 27% in March. Most see sector multiples of 20-25 times 2-year forward earnings as "fair" – near current levels – and only 12% expect a re-rating above that. Interestingly, underweights showed a "buy the dip" mentality, which means pullbacks could draw fresh money. In the event of a full Russia/Ukraine ceasefire, half of investors surveyed by MS would not change their positioning. 22% would add, while 28% would slightly or significantly reduce it. (Danilo Masoni) ***** EARLIER ON LIVE MARKETS: WAITING FOR GERMAN RECOVERY CLICK HERE FRESH RECORDS CLICK HERE EUROPE BEFORE THE BELL: FUTURES ADVANCE, AWAIT HOUSE VOTE CLICK HERE US CONGRESS POISED TO GET BACK TO WORK CLICK HERE