Investor Insight: Europe’s Defense Rally, 5 Key UK Charts, and Nick Train

Defense was one of the breakout stock market themes for 2025, with some European names doubling in value and more. So far in 2026 we’re seeing a continuation of the trend: Sweden’s Saab SAAB B is already up nearly 30% and Rheinmetall RHM isn’t far behind in terms of year-to-date gains. Here new investors face a dilemma: assume the status quo will prevail as the world gets messier and back the momentum trade, a successful strategy so far. Or they could sit on the sidelines and assume that defense valuations have ramped up too far for an attractive entry point. That latter theory holds firm for Saab, which is a 1-star stock and now significantly overvalued. But Morningstar valuations suggest that Germany’s Rheinmetall, the breakout European stock of 2025, still has room to run, as do France’s Thales HO and Dassault Systemes DSY. Read Ollie Smith’s roundup here.

Away from defense, Antje Schiffler provides an overview of the key charts European investors should be looking at, including GDP forecasts, gas storage and exchange rates. Morningstar’s chief European markets strategist Michael Field has also written his first column of the year. In it he says that recent gains for the region’s markets carry risk for new investors.

“The danger of investing at today’s valuations is not the risk of permanent capital loss, but more the risk of falling into the red quite easily if markets take a turn,” he says.

In the UK, Ollie Smith looks at the five charts that will define the economy and markets in 2026, which include food prices, unemployment and government borrowing.

Star fund manager Nick Train survived a scare at the AGM of Finsbury Growth and Income FGT and maintained his ongoing series of public apologies for the trust’s underperformance. More than 97% of votes cast were for “continuation” in the current form. That was 41.5 million votes. But turnout was below 40%, so it’s hard to tell if this is a ringing endorsement of Train’s now quarter-century tenure. Questions about performance are unlikely to recede unless Train snaps his five-year losing streak relative to the FTSE AllShare.

Next week we get UK inflation data for December, and current forecasts show a slight uptick to 3.3%. The long build-up to the first BoE meeting of the year continues, but this will be the final data print before the early February decision.