FTSE 100 giants Rolls-Royce and BAE Systems surge following Ukraine defence summit
UK and European defence shares rose to near-record highs on Monday morning lead by names such as Rolls-Royce and BAE Systems, after the defence summit in London, at which European leaders emphasised support for Ukraine and pledged to raise defence spending.
The STOXX 600 rose 0.4 per cent boost, following ten consecutive weeks of gains for the European index, while the European aerospace and defence index jumped by six per cent to a record high.
Shares in Rolls-Royce Holdings surged five per cent in early deals following last week’s announcement that the firm had reinstated dividends and introduced a new £1bn share buyback programme.
Interactive Investor has reported that Angela Strank, a Rolls-Royce non-executive director who bought shares in the company in February 2023, has seen a 500 per cent return on investment.
Rolls-Royce’s valuation has risen to more than £60bn, up from lows of just under £3bn in September 2020.
Meanwhile, shares in BAE Systems stock jumped as much as 17 per cent in early deals, whilst shares in German defence giant Rheinmetall soared by 17.4 per cent and Italian group Leonardo rose by 15.1 per cent.
The surge in buying followed Sir Keir Starmer’s push for a European “coalition of the willing,” who announced a £1.6bn missile deal to reinforce Ukrainian air defence as part of the European leaders’ meeting.
This major export finance deal amounts to more than 5,000 air defence missiles, which the French defence firm Thales Group will manufacture in Belfast.
Starmer told the BBC’s Laura Kuenssberg on Sunday that his “driving purpose” over a frantic week of diplomacy has been to reunite Ukraine, and to “negotiate a European element to security guarantees”.
Overnight, President Macron urged European leaders to raise defence spending to more than 3 per cent of GDP.
“For the past three years, the Russians have been spending 10 per cent of their GDP on defence. We need to prepare what comes next, with an objective of 3 to 3.5 per cent of GDP,” Marcon told French newspaper Le Figaro.
UK defence stocks surged in February, as Starmer announced that defence spending would rise from 2.3 per cent to 2.5 per cent by 2027 – ahead of his crunch summit with President Trump last week.