Protection Shares Rise; The US assault on Venezuela heralds the period of “laborious energy”.

Defense stocks in Europe and Asia rose sharply on Monday as investors gauged that the dramatic ouster of Venezuelan leader Nicolas Maduro could herald a major geopolitical shift that will boost arms trade in the long run.

RheinmetallGermany’s largest arms maker, rose over 8%, while military technology and surveillance specialist Hensoldt rose more than 7%. of Italy Leonardo rose by more than 5%, while its German colleague Renk added around 8%.

Swedish manufacturer of fighter aircraft Saab added more than 6%.

Previously, Japan’s IHI Corp led the Asian defense stocks, up about 9%, followed closely by Mitsubishi Heavy Industrieswhich rose by more than 8%. Kawasaki Heavy Industriesmeanwhile, rose nearly 8%. In South Korea, Hanwa Aerospace closed 7% higher, while shares of Poongsan gained more than 2%.

There are now fighter jet giants in the USA Lockheed Martin and military aircraft manufacturer Northrop Grumman both rose more than 1%. The iShares US Aerospace & Defense ETF (ITA) rose more than 1% to hit a new all-time intraday record.

Fawaz Chaudhry, chief investment officer at Fulcrum Asset Management, said Maduro’s ouster was a “signaling exercise” that would change geopolitics.

“When President Trump invoked the Monroe Doctrine, he was talking about the near sphere in America taking control through hard power, through hard power resources,” Chaudhry said on CNBC’s “Europe Early Edition” on Monday.

“We’re talking about a world that’s trying to transition into a new era where we’re basically going to do it [have] “To give military installations hard power and take control, which is essentially a different policy than before.”

Chaudhry expects this more forceful US foreign policy approach will mean “more armament in Europe and Asia” in the longer term, adding that defense stockpiles and military spending will continue to rise.

“What President Trump and what America has just done in Venezuela will increase that. More military spending, more armament in Europe and Asia, so that trend will continue,” he explained.

New year, new world order

The gains by European defense contractors mark a significant turnaround for the sector, which has struggled in recent weeks amid the prospect of a possible peace deal between Ukraine and Russia.

Aoifinn Devitt, senior investment advisor at Moneta, expects defense spending to rise due to US exceptionalism and the “gunboat diplomacy” theme on display in recent days.

“We know that defense stocks actually fluctuated when it looked like there was peace in Ukraine. But ironically, if anything, this issue is particularly highlighted.” [by] “This rhetoric is spreading to neighboring countries,” Devitt told CNBC’s “Squawk Box Europe” on Monday.

More broadly, defense has several important structural tailwinds, Devitt said, pointing to an increase in German military spending that has been “fully supported” by the current German government.

“New year, new world order – I think we all have to accept that. This will drive precautionary defense spending,” Devitt noted. “Do we think this is a productive use of resources where we’re actually creating jobs and generating long-term economic growth? Probably not. But that’s where we need to go.”

Stephen Dover, chief market strategist and head of the Franklin Templeton Institute, said other countries with territorial interests elsewhere could be emboldened by the Trump administration’s unilateral use of force.

The move is also likely to increase uncertainty about the dollar’s safe-haven role, Dover said in a note, “while raising further questions about the deterioration of international institutional pillars.”

“The latest action by the US military is therefore likely to reinforce the already begun trend of various countries around the world to invest more in their national security. This has been one of our most important investment themes since the Russian invasion of Ukraine.”