Weapons companies’ share prices surged across Europe and the UK’s benchmark stock index reached a record high amid talks of increased defence spending.
The FTSE 100 index of the most valuable companies on the London Stock Exchange hit a level never seen before as arms maker BAE Systems saw its share price rise as much as 17.5% on Monday to its record high.
That share price rise added about £5.92bn to the company’s total value on Monday from the close on Friday afternoon.
Also boosting the FTSE 100 to a never-before-seen level was defence and aerospace firm Rolls-Royce Holdings whose stocks rose 6% at one point on Monday.
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Elsewhere on the London Stock Exchange, the bigger FTSE 250 index comprising more British companies was also raised by the anticipated growth in weapons spending.
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Its biggest risers were defence technology company QinetiQ and defence support business Babcock International, which climbed 10.3% and 9.3% respectively.
It was not just British arms businesses given a lift, across Europe stocks in such companies were on the up.
A Europe-wide phenomenon
Shares of Germany’s largest defence company Rheinmetall jumped 18% while Italy’s Leonardo was up 15%.
Expectations of more defence spending rose after European leaders got together in London to discuss greater funding for Ukraine in its fight against Russia and a possible EU-backed peace deal.
Why?
Prime Minister Sir Keir Starmer announced on Sunday a loan to Ukraine and a £1.6bn deal for a Belfast factory to supply missiles for the country’s fight against Russia.
Mr Starmer had suggested a coalition of European and other allies could defend a potential deal for Ukraine to “guarantee the peace” and increase military spending to do so.
He made the comments at a summit of EU leaders, along with Canada and Turkey, which had been planned for more than a week but took on urgency following the disastrous meeting and diplomatic breakdown between President Donald Trump and Volodymyr Zelenskyy at the White House on Friday.
The UK had already announced it would increase military spending to 2.5% of GDP – a measure of everything produced in the economy – by 2027.
Chancellor Rachel Reeves had also announced an extra £2.26bn for the Ukrainian war effort, funded by the profits made from hundreds of billions of dollars worth of Russian sovereign assets frozen since the start of the full-scale war in February 2022.
