Key facts
- Rolls-Royce and BAE Systems shares rose following the announcement of a £15 billion defence spending plan.
- The plan was unveiled by Keir Starmer.
- Rolls-Royce shares gained nearly 3% to 1,457p.
- BAE Systems shares increased almost 2% to 1,842p.
- Babcock International, Qinetic, Cohort, and Velocity Composites also saw share price increases.
London-listed defence stocks, including Rolls-Royce and BAE Systems, experienced a significant rally on Tuesday following the government's announcement of a £15 billion expansion in military spending. The plan, unveiled by Keir Starmer, was met with investor enthusiasm, driving up share prices across the sector.
Rolls-Royce shares climbed nearly 3% to 1,457p, nearing a recent record high. The company is a key supplier to the Ministry of Defence, providing engines for aircraft and nuclear reactors for submarines. BAE Systems, the largest single supplier to the MoD, saw its shares rise almost 2% to 1,842p. BAE is involved in developing the RAF's next-generation fighter jet and builds UK submarines.
Other defence companies also benefited from the announcement. Babcock International's shares increased over 3% to 950p, supporting the army's vehicle fleet. On the FTSE 250, Qinetic, which trains RAF pilots, was up 2% to 421p. AIM-listed Cohort, a supplier of military sensors, rose nearly 5% to 1,250p, while Velocity Composites, a supplier of carbon fibre materials for military use, added almost 8% to 14p.
The defence investment plan, though met with some political controversy, was sufficient to spark a broad advance for the defence sector. Military chiefs had reportedly sought double the allocated amount, and a former Defence Secretary, John Healy, resigned when Downing Street did not increase spending further.