Weapons companies’ share prices surged across Europe and the UK’s benchmark stock index reached a record high amid talk of increased defence spending.
The FTSE 100 index of the most valuable companies on the London Stock Exchange hit a level never seen before as arms maker BAE Systems saw its share price rise as much as 17.5% on Monday to its record high.
That share price rise added about £5.92bn to the company’s total value on Monday from the close on Friday afternoon.
Also boosting the FTSE 100 was defence and aerospace firm Rolls-Royce Holdings whose stock rose 6% at one point on Monday.
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Elsewhere on the London Stock Exchange, the bigger FTSE 250 index comprising more British companies was also raised by the anticipated growth in weapons spending.
3:52 The Ukraine summit: How the day unfoldedIts biggest risers were defence technology company QinetiQ and defence support business Babcock International, which climbed 10.3% and 9.3% respectively.
More on Defence Related Topics: Defencestock marketIt was not just British arms businesses given a lift, across Europe stocks in such companies were on the up.
A Europe-wide phenomenon
Shares of Germany’s largest defence company Rheinmetall jumped 18% while Italy’s Leonardo was up 15%.
Expectations of more defence spending rose after European leaders got together in London to discuss greater funding for Ukraine in its fight against Russia and a possible EU-backed peace deal.
Why?
Prime Minister Sir Keir Starmer announced on Sunday a loan to Ukraine and a £1.6bn deal for a Belfast factory to supply missiles for the country’s fight against Russia.
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Tap here to followMr Starmer had suggested a coalition of European and other allies could defend a potential deal for Ukraine to “guarantee the peace” and increase military spending to do so.
He made the comments at a summit of EU leaders, along with Canada and Turkey, which had been planned for more than a week but took on urgency following the disastrous meeting and diplomatic breakdown between President Donald Trump and Volodymyr Zelenskyy at the White House on Friday.
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The UK had already announced it would increase military spending to 2.5% of GDP – a measure of everything produced in the economy – by 2027.
Chancellor Rachel Reeves had also announced an extra £2.26bn for the Ukrainian war effort, funded by the profits made from hundreds of billions of dollars worth of Russian sovereign assets frozen since the start of the full-scale war in February 2022.