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Investing.com -- European aerospace and defense stocks experienced a downturn in today’s midday trading, with German arms maker Rheinmetall (ETR:RHMG) down 3.2% and sensors-provider Hensoldt falling as much as 6%.
This market movement comes amid growing concerns that newly imposed U.S. tariffs could trigger a global recession and weaken the dollar, affecting the sector’s future profitability.
The negative sentiment rippled through the industry, as the U.K.’s Rolls-Royce (OTC:RYCEY) and Babcock International (LON:BAB) saw declines of 2.7% and 5.9%, respectively. France’s Thales (EPA:TCFP) fell 4.3%, Italy’s Leonardo declined 4.2%.
Spain’s Indra Sistemas (BME:IDR) dropped 6.8%, and Sweden’s Saab lost 3.2%. BAE Systems (LON:BAES) of Britain saw a relatively modest decrease of nearly 1.6%.
Despite the day’s losses, it’s important to note that these companies have not yet forfeited their year-to-date gains, which were previously bolstered by expectations of increased military spending throughout Europe.
Further adding to the pressure, France’s Dassault Aviation saw a 5.7% drop, engine manufacturer Safran (EPA:SAF) declined by 7.9%, and Airbus fell 7.1%.
According to Barclays (LON:BARC), the higher U.S. tariffs have resulted in the depreciation of the U.S. dollar, which "significantly impacting future profitability of the European aerospace companies."
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