LONDON, March 12, 2026, 13:15 GMT
Shares in BAE Systems jumped 3.25% to 2,300.5 pence by 1304 GMT on Thursday, having peaked near 2,313 pence earlier. Defence stocks managed to post gains, bucking the trend as the broader London market slipped. The FTSE 100 shed 0.4%, with defence one of the few areas showing strength.
This shift is notable as defence stands out in a market rattled by another oil shock linked to the Middle East conflict. With crude hitting $100 a barrel again and reigniting inflation fears, Europe’s aerospace and defence index advanced 1.7%. Italy’s Leonardo surged as it raised its growth targets.
“The longer the disruption goes on, the greater the impact on energy prices and in turn global inflation,” Danni Hewson, head of financial analysis at AJ Bell, told Reuters. Most UK sectors have taken a hit, but money keeps flowing into defence stocks. Reuters
BAE’s Wednesday update landed with investors, as the company said it had wrapped up the preliminary design review—a key engineering hurdle—on the $1.2 billion U.S. Space Force missile-warning and tracking program. “We have achieved a successful Preliminary Design Review with Space Force’s Space Systems Command,” Thai Sheridan, vice president and general manager of Military Space at BAE Systems, said. The company mapped out a 10-spacecraft constellation and the ground system that will support it. PR Newswire
Earnings momentum hasn’t faded for the stock. On Feb. 18, Britain’s top defence contractor posted a 12% increase in 2025 operating profit, set an all-time high order backlog at 83.6 billion pounds—work signed but undelivered—and projected 2026 sales to climb 7% to 9%, with operating profit rising 9% to 11%. CEO Charles Woodburn dubbed it a “new era” for defence budgets. Reuters
BAE shares pushed higher again Thursday, adding to hefty gains this year. The stock has climbed roughly 33.8% since early 2026, with prices now hovering close to the upper end of a 52-week band between about 1,394 and 2,314 pence.
Still, it’s hardly a one-way bet. Shares of Germany’s Rheinmetall slid close to 8% on Wednesday after the defense contractor issued margin and free-cash-flow guidance that underwhelmed the market — a gauge of retained cash post-investment — coming in below analyst expectations. It’s a sharp cue that defense names aren’t immune; investors don’t hesitate to punish when execution falters.
BAE shares are hugging the upper end of their 12-month range, even as broader markets get tossed around by oil prices, inflation worries, and rate jitters. In London, the stock stands out—one of the rare big-cap climbers left, with most sectors sliding into negative territory.
