Weapons and wealth: Market reaction to Europe’s defense push

This paper analyzes abnormal returns around the EU’s Readiness 2030 defense initiative. Defense stocks saw strong positive returns, especially pre-announcement, while high-tech firms showed weak or negative returns—indicating no spillover effect to the tech sector and underscoring the role of industry classification in market reactions. • European defense stocks outperformed the market around the Readiness 2030 announcement. • CARs suggest investors likely anticipated the policy announcement. • Results are robust across indices and supported by cross-sectional analysis.