Tensions over Greenland sharpened investor focus on defence and rare earths, driving British and European defence stocks higher. BAE Systems jumped over 6%, taking five-day gains to about 20%, while Babcock rose 17% over the week with a 1.6% rally this morning. Rheinmetall, Renk and Leonardo were notable continental gainers. The rearmament story remains in early stages, with recent selloffs seen as overdone and long-term sector value intact. Expectations that Russia may regenerate forces and Europe will materially raise defence spending support the theme. In the US, a proposed 50% defence budget increase and restrictions on buybacks add complexity for defence equities.
"I still like European defence as a theme. The rearmament story is yet to really even begin and whilst we have seen a material rerating in several large defence names on the continent and in the UK, a selloff in the autumn on some fuzzy 'Ukraine peace deal hope' trade is overdone and fails to capture the long-term value in the sector."
"Over in the US, President Trump vowed to increase the defence budget by 50% to $1.5tn, but also said he would not permit dividends and stock buybacks for defence companies. Raytheon fell over 2% and Lockheed was down almost 5% but both rallied sharply in after-hours trading. A massively larger defence budget should be good news for Palantir."
Read at London Business News | Londonlovesbusiness.com
Unable to calculate read time
Collection
[
|
...
]