January 8, 2026, 08:48 GMT
- European aerospace and defence shares hit a fresh record; BAE Systems gains about 6% in London
- Trump says next year’s U.S. military budget should be $1.5 trillion after talks with lawmakers
- BAE’s two-session rally pulls the stock back to within about 1% of its 52-week high
Shares in Britain’s BAE Systems jumped on Thursday as European arms makers hit a fresh record after U.S. President Donald Trump called for higher U.S. defence spending and put a $1.5 trillion figure on next year’s military budget. Europe’s aerospace and defence index was up about 2% by 0816 GMT, with Chemring, Leonardo and Rheinmetall also higher. https://www.reuters.com/business/aerospace-defense/defence-stocks-europe-all-time-high-after-trump-calls-higher-us-defence-budget-2026-01-08/
The move matters now because defence stocks have started trading like a live feed of geopolitics and budget politics. Defence stocks in London rose 1.7% on Wednesday even as the FTSE 100 fell 0.7%, after U.S. strikes on Venezuela earlier this week stirred fresh concern among investors. https://www.reuters.com/world/uk/london-stocks-retreat-record-high-investors-assess-us-venezuela-news-2026-01-07/
BAE was up 6.1% at 2,044 pence on Thursday, taking its two-session gain to about 8.6%. The rise put it within roughly 1% of its 52-week high; the stock traded between 2,027 and 2,055 pence and opened at 2,040 pence, according to Investing.com data. 1
DailyForex analyst Adam Lemon described the move as a “breakout” — trader-speak for a price punching above a recent range — and flagged the 1,800 to 1,820 pence area as a key zone to hold. “As long as BA. holds above the £1,831.50 support level, the technical structure favours a continuation of the uptrend,” he wrote, pointing to a 2,300–2,370 target region, which would imply roughly 13%–16% upside from Thursday’s level. 2
The sector’s heft in London indices adds another layer to the trade. Kalkine Media said earlier this week that defence firms have stayed visible across major FTSE benchmarks, from the FTSE 100 to the broader FTSE 350, helped by long-standing procurement frameworks and public spending links. 3
But the rally is not a done deal. Trump’s $1.5 trillion figure is not a budget bill yet, and any pushback from lawmakers — or an easing of geopolitical tension — can take the shine off a crowded position fast. Big defence programmes also carry the usual risks: delays, cost creep and politics intruding at awkward moments.
BAE, which makes weapons systems, ships and electronics across its businesses, is one of the biggest defence names on the London market and a steady proxy for government demand. That stability cuts both ways: it can cushion downturns, but it also ties the company’s pace to procurement cycles and contract timing. https://www.reuters.com/markets/companies/BAES.L/
