London, June 8, 2026, 12:02 BST
BAE Systems jumped 1.22% to 1,954 pence as of 12:02 p.m. BST in London on Monday, bucking a flat FTSE 100. Investors moved into defence stocks while tech sold off and tensions rose again in the Middle East. BAE traded between 1,900p and 1,962p so far. The London Stock Exchange trades from 8:00 a.m. to 4:30 p.m. BST.
STOXX 600 dropped 0.7% to hit a two-week low by 0828 GMT, with markets rattled as Israel and Iran exchanged fire. Oil jumped more than 4% and AI stocks slid, according to Reuters.
FTSE 100 flat, BAE gains, sensitive stocks drop The FTSE 100 was nearly flat at 10,366.53, according to delayed AJ Bell figures. BAE added 1.04% in that snapshot. Some cyclical names slipped in the same feed.
BAE gives investors pretty direct exposure to Western defence spending. It makes aircraft, weapons, munitions, warships, subs, cyber and electronic systems. Large operations are in the UK and US.
BAE’s latest trading update supported the move. On May 7, the company held to its 2026 targets: sales growth between 7% and 9%, underlying EBIT up 9% to 11%, underlying EPS up 9% to 11%, and free cash flow over £1.3 billion. CEO Charles Woodburn called it a “strong start to 2026.”
BAE has a big order book. Back in February, BAE said 2025 sales came in at £30.7 billion, with underlying EBIT at £3.32 billion. Order intake hit £36.8 billion and the backlog — work signed but not yet delivered — was £83.6 billion. CEO Woodburn called it a “new era of defence spending.” Baesystems
The comparison is being made to European defence names like Thales and Rheinmetall, instead of commercial aerospace stocks. Reuters noted rising demand for air-defence and a shift in tone in parts of the defence sector, with some investors now questioning if cheap drones might change the economics of future warfare.
Morningstar equity analyst Loredana Muharremi said BAE is playing a part in a “multi-decade” rearmament push in Europe. The note from Morningstar also said BAE’s valuation is still tied to UK government defence spending, which remains the main domestic swing factor. Morningstar
But there’s a big risk to the trade. The UK Public Accounts Committee said Sunday that delays to the Defence Investment Plan—covering funding and equipment for the armed forces—have damaged the government’s standing with both allies and defence companies, pushed up costs for the budget and hit suppliers, especially smaller firms. Further delays or cuts to programmes where BAE has pricing power could hit the stock’s defence-spending premium.
BAE is set to report results for the first half on July 30. Until then, traders are focused on the UK’s spending plan, potential Middle East risks, and the stock’s ability to hold above Monday’s 1,900p intraday low.
