Shares in London-listed defence firms rallied during early trading on Wednesday after President Donald Trump changed his tune on the Russia and Ukraine conflict.
Aerospace firm BAE Systems led the City’s blue-chips with a 1.6 per cent gain to 1,982.50.
Meanwhile Babcock was up over one per cent to 1,195 and FTSE darling Rolls-Royce rose 0.8 per cent to 1,170.50.
Still, the moves were not enough to drag the wider index out of the red with the FTSE 100 falling 0.4 per cent on Wednesday morning. This was led by slumps from Burberry, Barclays and Standard Chartered.
It follows Trump dramatically changing his tune on Ukraine’s prospects in its conflict with Russia.
The President said Ukraine “is in a position to fight and win all of Ukraine back in its original form”.
When pressed whether he supports NATO members shooting down Russian air crafts he answered: “Yes I do”.
Neil Wilson, UK investor strategist at Saxo, said: “Stocks in London were down early doors on Wednesday with the FTSE 100 testing the 9,200 level, down about a third of a percent, after nudging around the 9,260 area yesterday.
“Defence stocks were among the big gainers after Donald Trump agreed Nato countries should shoot down Russian aircraft that violate their airspace, and backed Ukraine to reclaim all its territory lost to Russia”.
Europe enjoys defence rally
The defence rally spread across continental Europe with Italy’s Leonardo up near three per cent and Germany’s Rheinmetall up two per cent.
London’s defence stocks have enjoyed a bumper year after Trump’s return to the White House in January pushed nations to up their defence spending.
The UK has said it will commit to spending five per cent of GDP on defence by 2035 as Trump pressured NATO members to hike their contributions.
Defence shares have surged on the back of the news, with Babcock up nearly 140 per cent for the year.
Earlier this year, the firm’s chief executive David Lockwood hailed a “new era for defence”.
“There is increasing recognition of the need to invest in defence capability and energy security, both to safeguard populations and to drive economic growth,” he said as the company posted a staggering revenue jump in the last financial year.
The FTSE 100 company – which plays a significant role in supporting the UK’s nuclear submarine program – recorded an 11 per cent increase in revenue to £4.8bn.
