European equities moved higher on Monday, kicking off the first full trading week of 2026 on a positive note as defense stocks gained amid renewed geopolitical tensions.
The pan-European Stoxx 600 finished the session up 0.9%, setting a fresh record high. Germany’s DAX advanced 1.5%, France’s CAC 40 rose 0.2%, and the UK’s FTSE 100 added 0.5%.
Defense stocks led the gains across the region. Shares of major European defense firms, including Leonardo, Rheinmetall, Renk, Hensoldt, Kongsberg, Dassault Aviation, and BAE Systems, all posted solid advances.
The rally followed a U.S. military operation in Venezuela over the weekend, during which American forces captured Nicolás Maduro. Maduro was subsequently transferred to New York, where he is expected to face drug trafficking charges.
Markets are now assessing the broader implications of U.S. involvement in Venezuela. U.S. President Donald Trump said Washington would temporarily take control of the country and signaled a willingness to maintain a military presence if necessary, stating that the United States was “not afraid of boots on the ground.”
Trump did not outline a timeline for a political transition in Venezuela, though he said the goal was to restore stability following the operation. Those comments were later softened by U.S. Secretary of State Marco Rubio, who emphasized that Washington does not intend to govern Venezuela directly.
According to Bernstein analyst Douglas Harned, rising military tensions often translate into higher defense spending, which tends to support defense-sector equities. He noted that any additional funding required for Venezuela or other active conflict zones would likely be incremental.
Energy stocks also saw gains. A regional oil and gas index climbed 0.8% as crude prices fluctuated, with investors weighing how potential disruptions to Venezuelan exports could affect an already well-supplied global oil market.
Brent crude futures rose 1.3% to $61.53 a barrel, while West Texas Intermediate futures increased 1.4% to $58.12. Both benchmarks had traded lower earlier in the session before reversing course.
