London, March 27, 2026, 19:06 GMT
BAE Systems shares fell again on Friday, giving up more ground even as defence-spending news stayed supportive. The stock finished around 2,070 pence, roughly 1.2% lower on the day, after Thursday’s 2.92% slide. 1
That matters because the demand backdrop keeps hardening even as the stock retreats. In the last two days, Norway raised long-term defence spending and reaffirmed plans for at least five BAE frigates, while the Pentagon said BAE and Lockheed Martin would lift output of seekers for THAAD, or Terminal High Altitude Area Defense, a U.S. missile-defence system designed to counter ballistic missile threats. 2
The move also shows how quickly market mood can swamp the order story. London’s FTSE 100 ended down 0.05% on Friday as Middle East uncertainty lingered, and IG chief markets analyst Chris Beauchamp said stocks would not “find their footing” until negotiations explicitly tackled the Strait of Hormuz. 3
Fresh programme news kept coming elsewhere in Europe. Britain and Turkey signed a new training and support agreement this week under their 8 billion pound Typhoon jet deal, with Leonardo among the companies set to supply components and training equipment. 4
MBDA’s update may matter almost as much as any company filing. The missile maker, jointly owned by Airbus, BAE and Leonardo, said it expects overall output to rise 40% in 2026, and Chief Executive Eric Beranger said the Iran crisis was “again increasing the need for ramp up” as inventories are strained; a French general also warned of shortfalls in Aster 30 and Patriot air-defence missiles. 5
BAE came into this pullback from a strong base. In February, the group reported a record 83.6 billion pound order backlog and forecast 2026 sales growth of 7% to 9%, with operating profit expected to rise 9% to 11%, as Chief Executive Charles Woodburn pointed to a “new era” of defence spending. 6
But the near-term setup is less clean than the headline demand story suggests. A Reuters markets analysis said European defence shares had become crowded trades before the Iran war deepened, leaving them exposed to mechanical selling, while industry representatives warned in February that Europe still lacked clear governance over who funds and buys which capabilities, raising the risk of delays and overlap. 7
The medium-term case, though, remains hard to ignore. NATO said on Thursday that European allies and Canada increased defence spending 20% in 2025, and Secretary General Mark Rutte said he expected members to show a “clear and credible path” toward the alliance’s 5% goal, the kind of shift that keeps BAE’s backlog — and the argument over how much growth is already in the shares — firmly in view. 8
