Finimize - 📈 The stock up 288% this year

What’s going on here?

A “pick-and-shovel” defense play stormed ahead by 288% to become Europe’s top-performing stock this year.

What does this mean?

Ever since AI took off, the firms supplying critical infrastructure tools – so-called picks and shovels – have been the biggest winners. Just look at Nvidia, chip designer to the stars. And now, a defense company is having its moment: Steyr Motors AG, which builds diesel engines for tanks and military boats. Defense-related orders made up 61% of Steyr’s €41.7 million ($45.3 million) revenue last year – and with European governments forecast to spend much more on their security, that number is only set to grow. Even better, the Austrian company says it can double production without breaking a sweat: no extra factories or hiring sprees required. Mind you, those sorts of claims have led to lofty expectations. If Steyr wants to keep its new investors sweet, its next earnings report – out March 18th – had better impress.

Why should I care?

For markets: The name’s Bond, Rising Bond.

Germany, Europe’s biggest economy, is devising a serious military makeover. And to fund it, the government is planning to raise cash by issuing a lot more bonds. Although, with higher government debt and possible inflation reboots ahead, investors are demanding higher yields in return. That may not bode well for other European borrowers, as rising bond yields make all sorts of loans more expensive.

The bigger picture: Europe’s cramming for a test.

French diplomat Jean Monnet once said, “Europe will be forged in crisis”. Well, this might finally be the moment. With US security commitments in doubt and an already struggling economy, Europe may now be forced to tackle deep-rooted challenges across everything from defense to capital markets. So far, so good: European leaders are working hard and fast on military spending and economic coordination. The real test, of course, is whether they can turn that urgent reaction into lasting improvements.

What’s going on here?

With nerves cracked by the prospect of even higher tariffs, investors pulled $5 trillion out of the S&P 500 on Thursday and rushed to strengthen their portfolios with gold.

What does this mean?

The key US stock market index officially entered “correction” territory – marked by a decline of at least 10% from a recent high. Tech stocks were some of the biggest rejects, with the Nasdaq down 2% on Thursday. Investors put their money toward gold instead, sending the precious metal to a record-breaking $2,985 per troy ounce. (And according to Macquarie, that could rise to as high as $3,500 this year.) It’s all because investors were shaken by the US president’s latest – you guessed it – tariff threats, including a proposed 200% tax on European alcohol imports.

Why should I care?

For markets: The president has the world guessing.

It wasn’t long ago that news of corporate tax cuts sparked a market rally, but escalating tariffs have made such optimism feel like a distant memory. Remember, levies on imports will put a financial strain on both businesses and everyday Americans. That, in turn, could reduce both companies’ profit and economic growth, while stoking inflation at the same time. No wonder Goldman Sachs is tamping down this year’s forecasts – both for the S&P 500 and the US economy at large. The big bank now expects the latter to pick up by just 1.7%.

Zooming out: Volkswagen’s swapping Beetles for tanks.

The odds of a US recession are rising, given the triple threat of high consumer debt, cost-conscious shoppers, and unpredictable political policies. But while investors are growing wary of the States, they’ve been warming up to Europe. That’s because European governments look set to push billions into local defense firms to bolster their military resources. Even the likes of Volkswagen are angling for a bit of the action: the carmaker is reportedly considering using its factories to make tanks.