Shares in BAE Systems surged to a record high on Monday, jumping by 19% at one stage, as the UK’s defence sector enjoyed a significant boost following the Ukraine summit hosted by Prime Minister Sir Keir Starmer over the weekend. The rally helped the FTSE 100 Index rise 23 points to 8,832.8, marking a new all-time high.
The stock market gains were driven by renewed commitments from global leaders to support Ukraine, including a £1.6 billion defence finance deal that will allow the country to purchase over 5,000 missiles from French defence giant Thales Group, manufactured in Belfast.
Defence stocks surge amid new military commitments
Alongside BAE Systems, other defence-related stocks saw significant increases:
- Rolls-Royce climbed 6%, making it the second-best performer in the FTSE 100.
- QinetiQ, a defence technology group, jumped 9% in the FTSE 250.
- Babcock International, which provides engineering support for the Royal Navy, rose 7%.
- Chemring, a specialist in explosives and countermeasures, saw its shares rise 4%.
- Avon Technologies, a gas mask and helmet manufacturer, climbed 7% among smaller-cap stocks.
- Cohort, which specialises in sonar, torpedoes, and military communications, saw a 10% surge in its stock price.
The strong market reaction underscores growing investor confidence in defence spending and the increased demand for military equipment, driven by heightened geopolitical tensions.
UK Pledges stronger defence support for Ukraine
The stock market rally follows a high-profile summit at Lancaster House on Sunday, where Sir Keir pledged to strengthen military aid for Ukraine and to form a “coalition of the willing” to ensure a long-term peace settlement.
Sir Keir announced a £1.6 billion finance package, aimed at enabling Ukraine to secure critical military resources. A key part of this deal includes the purchase of lightweight multirole missiles (LMMs), which will be manufactured in Belfast by Thales Group, creating around 200 new jobs in the UK.
“We are standing firm in our commitment to Ukraine,” said Sir Keir Starmer. “By strengthening our partnerships and ensuring that military support reaches those who need it, we are reinforcing our collective security.”
The Ukraine summit was attended by Ukrainian President Volodymyr Zelensky, who later met King Charles III at Sandringham. French President Emmanuel Macron, European Commission President Ursula von der Leyen, Spanish Prime Minister Pedro Sánchez, and outgoing Canadian Prime Minister Justin Trudeau were also among the 19 world leaders at the event.
Investor confidence in defence sector soars
Market analysts suggest that increased military spending commitments—particularly from NATO allies—are fuelling a renewed investor interest in the defence sector.
With continued uncertainty over global security, the UK’s defence industry is expected to play a key role in military supply chains, benefiting firms such as BAE Systems, Rolls-Royce, and Babcock International.
Financial experts have noted that defence stocks have outperformed the broader market in recent months, and Monday’s rally further solidifies growing optimism in the sector.
“The surge in defence stocks reflects the reality of increased defence spending globally. As geopolitical tensions rise, companies like BAE Systems are well-positioned to benefit,” said one market strategist.
More Read
BAE systems at the forefront of UK defence expansion
As the UK’s largest defence contractor, BAE Systems has seen record demand for its weapons, fighter jets, and military systems. The company plays a crucial role in supplying the British Armed Forces and international allies, making it a key player in global defence strategies.
The company is expected to benefit from long-term government contracts and increased NATO defence spending, as European nations ramp up military preparedness amid ongoing tensions in Ukraine and other conflict zones.
With defence spending set to increase, experts predict that defence stocks could continue to climb, providing strong investment opportunities for shareholders in BAE Systems and other leading defence firms.
The sharp rise in defence stocks signals a renewed focus on military investment—a trend that is likely to shape the UK’s economic and security policies in the years ahead.
