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European Banks and Wind Stocks Rally, Defence Stocks Slide: How Europe Traded the US Midterms
- The Stoxx 600 rose about 1.8% to around 657 in early trading on Wednesday, November 4, a day after falling 0.6% on chip-stock losses.
- The Stoxx 600 Banks index rose as much as 4.5%, on track for its best day since May, according to Bloomberg. Deutsche Bank gained about 3.6% and Intesa Sanpaolo about 3.3%.
- Ørsted jumped about 7.3% and Vestas about 5.2% on hopes of steadier US clean-energy policy.
- Defence fell: BAE Systems about -5.2%, Hensoldt -4.9%, Thales -4.5%, Saab -3.8%, Rheinmetall -3.2%, on fears a Democratic Congress slows US military spending.
- Germany's DAX traded up about 1.5%–2% and the FTSE 100 about 1.25%, to roughly 10,770.
A tale of two trades
European markets cheered the US midterm results on Wednesday, November 4, but not every sector joined in.
The Stoxx 600 rose about 1.8% to around 657 in early trading, recovering Tuesday's 0.6% drop, when chip stocks such as ASML, Infineon and STMicroelectronics fell 3%–4%. Germany's DAX traded about 1.5%–2% higher and London's FTSE 100 about 1.25% higher, near 10,770.
Under the surface, investors made a sharp rotation.
Banks: best day since May
The Stoxx 600 Banks index rose as much as 4.5%, on course for its strongest day since May, according to Bloomberg. Investors moved back into lenders focused on their home markets:
- Deutsche Bank: up about 3.6%
- Intesa Sanpaolo: up about 3.3%
A calmer political outlook in Washington and lower US Treasury yields lifted risk appetite globally. US bank stocks were also higher (our US report).
Wind power: a relief rally
- Ørsted: up about 7.3%
- Vestas: up about 5.2%
Ørsted has been one of the biggest victims of US policy hostility to offshore wind. A Democratic Congress makes further hostile legislation less likely, though it can't reverse executive actions on its own. US solar stocks jumped for the same reason (sector report).
Defence: the big losers
| Company | Approx. move, Nov. 4 |
|---|---|
| BAE Systems | -5.2% |
| Hensoldt | -4.9% |
| Thales | -4.5% |
| Saab | -3.8% |
| Rheinmetall | -3.2% |
Intraday moves reported by Investing.com.
The worry is that a Democratic Congress could slow the rise in US military spending. US budget priorities shape demand for weapons and set the tone for NATO allies.
European defence stocks have been one of the market's biggest winners since 2022, which makes them vulnerable to any change in the story. A Morningstar analyst said fears about the impact were "fair," but added that the firm still sees value in the sector. Read our analysis: are European defence stocks priced for permanent war?
The bigger picture for Europe
- Trade: Tariffs on European goods rest mostly on executive authority, so the midterms don't remove them.
- Defence budgets: European governments are still raising their own spending toward NATO targets. That supports long-term demand regardless of Washington.
- Rates: The Bank of England is expected to hike to 4% on Thursday (preview). The ECB held at 2.50% last week (coverage).
What it means for you
- Theme ETFs cut both ways. A defence ETF that soared on rising budgets can fall fast on political news.
- Broad exposure is calmer. A Europe-wide index fund owned banks (up), wind stocks (up) and defence (down) on Wednesday, smoothing the swings.
- Currency matters. A stronger euro or pound raises the value of European holdings in US or Canadian dollars.
What to watch next
- Thursday, November 5: Bank of England decision.
- Early November: Eurozone flash inflation and earnings from more Stoxx 600 companies.
- December 17: Next ECB meeting.
Frequently asked questions
Why did European defence stocks fall after the US midterms?
Investors worried that a Democratic Congress could slow the growth of US military spending, which has helped drive demand and sentiment for European defence companies. BAE Systems, Hensoldt, Thales, Saab and Rheinmetall all fell between roughly 3% and 5% on November 4.
Why did European bank stocks rally?
Lower political uncertainty in the US lifted risk appetite, and investors moved into banks focused on their home markets. The Stoxx 600 Banks index rose as much as 4.5%, heading for its best day since May.
Why did Ørsted and Vestas shares jump?
Investors bet that a Democratic Congress makes US support for wind and other clean energy more secure. Ørsted had been hit hard by US policy hostility to offshore wind, so it rallied about 7% and Vestas about 5%.
Are European defence stocks still a good investment?
That depends on price and your time horizon. European governments are still increasing their own defence budgets, and a Morningstar analyst said the sector still offers value despite fair concerns. Defence stocks have risen sharply, so they can fall sharply on news like this.
How can North Americans invest in European stocks?
The simplest route is a broad Europe or international ETF, which spreads your money across hundreds of companies and sectors. That avoids betting on a single theme such as defence.
Primary sources
- Bloomberg — European bank stocks rally as US midterm results lift market sentiment
- Investing.com — European defense stocks slip as Democratic midterm win raises spending worries
- Euronews — US midterms: What Trump's defeat means for Europe and global markets
- Morningstar — US midterms: How markets are reacting to Democrats' congressional gains
- Global News — Stock markets rally in early trading after U.S. midterm election
- MarketScreener — STOXX Europe 600 index quote
Data & disclaimer: This article is for educational purposes only and is not financial or investment advice. Figures reflect data available as of Nov 4, 2026, and conditions change — always confirm current pricing, rates and rules with the provider before you act. Written by Elizabeta Dimoska. See our editorial standards and disclosure.
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