Investors expect European countries to ramp up spending on fighter jets, tanks, and other equipment, bolstering the shares of the companies that can build it.

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.

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 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.

NATO is dead,” wrote Vertical Research Partners analyst in a Tuesday report summarizing recent news for his clients.