London, March 27, 2026, 19:06 GMT
Shares of BAE Systems slipped further on Friday, losing about 1.2% to close near 2,070 pence. That move comes on the heels of Thursday’s 2.92% drop, despite continued positive signals for defence spending.
This is notable: demand keeps ramping up, even with the stock slipping. In just the past two days, Norway boosted long-term defence outlays and stuck with its order for a minimum of five BAE frigates. Meanwhile, the Pentagon announced that both BAE and Lockheed Martin are set to increase production of seekers for THAAD—the U.S. missile-defense system designed to intercept ballistic threats.
Market sentiment can upend any narrative in a flash. The FTSE 100 in London slipped 0.05% on Friday, with uncertainty in the Middle East hanging over the session. IG’s chief markets analyst Chris Beauchamp said equities still wouldn’t “find their footing” unless talks directly addressed the Strait of Hormuz. Reuters
Elsewhere in Europe, programme updates kept rolling in. Britain and Turkey this week inked a fresh training and support agreement tied to their £8 billion Typhoon jet deal. Leonardo is lined up to provide both components and training gear as part of the arrangement.
MBDA’s latest update could carry as much weight as any corporate release out there. The missile manufacturer—owned by Airbus, BAE, and Leonardo—expects a 40% jump in total output by 2026. CEO Eric Beranger pointed to the Iran crisis, calling it a renewed catalyst for ramping up production as stockpiles come under pressure. A French general flagged shortages in both Aster 30 and Patriot air-defense missiles.
BAE entered the latest dip after building up momentum. Back in February, the company posted a record-high order backlog of 83.6 billion pounds and projected 2026 sales would climb between 7% and 9%. Operating profit, they said, should advance by 9% to 11%. Chief Executive Charles Woodburn described it as a “new era” for defence spending. Reuters
The near-term picture looks murkier than the strong demand narrative would imply. Reuters markets analysts flagged that European defence stocks were already heavily traded even before the Iran conflict escalated, making them vulnerable to forced selling. Back in February, industry voices also pointed to unresolved questions around who pays for and procures what across Europe, with a lack of clear oversight threatening delays and duplication.
Still, it’s tough to look past the medium-term setup. NATO reported Thursday that European allies and Canada are set for a 20% jump in defence spending in 2025. Secretary General Mark Rutte said he wants to see members lay out a “clear and credible path” to the bloc’s 5% target — a shift that’s keeping BAE’s backlog, and the debate over how much upside is already priced in, front and center. Reuters
