US defense contractors are on shaky ground just a month into the new administration — taking a backseat to European peers — as mounting concerns over a deluge of policies including a tightened military spending budget send shock waves across the government-sensitive group.

European officials talked of increasing defense spending at the Munich Security Conference. Saab and Hensoldt stocks stand to benefit.

A flurry of trading has helped push the Pan-European Stoxx 600 index to a record high as investors expect Europe’s governments to increase military spending.

Defense stocks continued their meager comeback on Wednesday, after President Donald Trump’s recent promise to slash military spending. European defense firms are still outpacing them by some distance.

European defense stocks rose, buoyed by the prospect of higher military budgets, while global markets were largely subdued with the U.S. closed to mark Presidents Day.

European markets traded higher on Tuesday as traders kept a close eye on geopolitical developments in the region.

Shares in Asia and Europe gained on Tuesday, lifted by defense and military stocks as U.S. and Russian officials meet in Saudi Arabia to discuss ending the war in Ukraine. Japan’s Nikkei 225, the Hang Seng in Hong Kong,