London, March 26, 2026, 15:14 GMT
BAE Systems shares slipped in London on Thursday, extending a retreat from last week’s peak. By 1244 GMT, the stock was down 1.25% at 2,129 pence, about 10% below the 52-week high of 2,360p reached on March 18. 1
The move matters because BAE remains one of Europe’s clearest rearmament trades. NATO said on Thursday that Europe and Canada lifted defence spending 20% in 2025, while BAE said last month its order backlog — work already signed but not yet delivered — hit a record 83.6 billion pounds and forecast 2026 sales growth of 7% to 9%; Chief Executive Charles Woodburn called it a “new era” of defence spending. 2
The latest U.S. catalyst came on Wednesday, when the Pentagon said it had reached framework agreements with BAE, Lockheed Martin and Honeywell to expand munitions output as Washington pushed industry onto a “wartime footing.” Under the deal, BAE and Lockheed will quadruple production of seekers for the Terminal High Altitude Area Defense, or THAAD, interceptor — the guidance sensor that helps a missile track its target. 3
Hours later, Britain and Turkey signed a multi-billion-pound training and support agreement linked to Turkey’s 8 billion-pound Eurofighter Typhoon fighter-jet purchase. BAE and Leonardo UK are among the suppliers providing components and training equipment. 4
Another signal on demand came on Thursday from missile maker MBDA. Chief Executive Eric Beranger said the Iran crisis was “again increasing the need for ramp up” as the group forecast a 40% rise in 2026 output and said it had already spent 1 billion euros to build inventory ahead of contracts. 5
Yet the stock is not holding every defence headline. Helen Jewell, BlackRock’s international chief investment officer for fundamental equities, wrote on Thursday that European defence shares fell almost 4% in the four days after the first U.S.-Israeli strikes on Iran because of “crowded positioning, not fundamentals” — meaning too many investors were in the same trade. 6
BAE’s retreat has also tracked a rougher market. London’s FTSE 100 was down 1.1% by 1013 GMT and European shares fell more than 1% as higher oil prices and rate worries hit risk appetite; Reuters reported earlier this week that defence stocks were already fading as investors weighed conflicting signals on Iran. 7
That leaves the shares pulled between stronger demand and a market that has already priced in a lot of it. Investec analyst Ben Bourne said in January that pressure on U.S. contractors could “foster a rotation to UK defence companies,” helping explain why BAE has stayed in focus among UK defence names even as Thursday’s pullback cooled the trade. 8
