London, March 24, 2026, 15:43 GMT
BAE Systems shares fell about 1.2% in London trade on Tuesday to roughly 2,115 pence, extending Monday’s 4.9% slide to 2,140 pence. The stock is now about 10% below last week’s 52-week high of 2,360 pence. 1
The move stood out because BAE published its 2025 annual report on Tuesday, but the filing did not change the outlook set with February’s preliminary results. In that update, the company reported a 12% rise in full-year operating profit, a record £83.6 billion order backlog and 2026 sales growth guidance of 7%-9%, while Chief Executive Charles Woodburn said BAE was entering a “new era of defence spending.” 2
That backdrop leaves the shares with less room for a routine filing to impress. Trading Economics data showed BAE was still up nearly 35% over the past 12 months even after Tuesday’s dip. 3
Tuesday’s trading was mostly about the sector, not the company. Reuters said Europe’s aerospace and defence index fell 1.8% as mixed signals around the Middle East war pushed oil back above $100 a barrel and hurt appetite for risk, while David Morrison, a senior market analyst at Trade Nation, said markets “hadn’t priced in a closure of the Strait of Hormuz.” 4
Monday showed how fast that can flip. Oil plunged more than 10% after the United States delayed planned strikes on Iranian energy infrastructure, briefly puncturing the war premium — the extra value investors attach to companies seen as beneficiaries of conflict — before Tehran rejected talk of progress and crude rebounded on Tuesday. 5
Investors are also getting choosier inside the defence complex. Italy’s Leonardo jumped to a record this month after lifting targets, while Germany’s Rheinmetall fell nearly 8% when its 2026 margin and cash-flow outlook missed expectations. 6
The longer-run policy backdrop still looks firm. EU Council President Antonio Costa said on Tuesday he was confident Britain and the European Union would reach a deal on UK participation in the bloc’s 150 billion euro SAFE defence fund, and British firms already can take up to 35% of a project’s value under current third-country rules. 7
But the near-term risk cuts both ways. A clearer ceasefire path could drain more of the conflict premium from defence shares, while a deeper Gulf disruption could lift oil again and keep wider market pressure high even if demand for weapons and military systems stays strong. 8
