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European defense stocks surged, with shares of companies like BAE Systems reaching record highs, as the Middle East conflict heightened market expectations for increased security spending. The Goldman Sachs defense stock basket index rose by as much as 5.9%, marking the largest increase since early January, bringing the year-to-date cumulative gain to approximately 23%. BAE Systems' stock price rose by as much as 8.3%, reaching a record high; Dassault Aviation increased by 4.3%, Thales by 6.2%, Rheinmetall by 6%, Hensoldt by 8.9%, Leonardo by 6.5%, Saab by 8.7%, and Kongsberg by 6.6%