London, Jan 19, 2026, 09:03 GMT — Regular session
- BAE Systems shares climbed roughly 1% in early trading, outperforming the softer UK market.
- Company revealed a fresh batch of share buybacks set for cancellation
- Attention now turns to full-year results next month for updates on cash flow and margin outlook
BAE Systems shares nudged up on Monday as the defence contractor announced a fresh round of share buybacks, providing steady support to its stock at the start of the week.
Shares climbed roughly 1% to about 2,108 pence by 0900 GMT, based on Hargreaves Lansdown figures, following a stronger open and trading in a narrow band. 1
The shift was significant, hitting as European stocks fell amid fresh tariff threats tied to Greenland. The risk-off mood dragged the STOXX 600 down roughly 1.3%, with the FTSE 100 also slipping. BAE stood out as one of the few major UK stocks trading higher in early action. 2
BAE confirmed it repurchased 103,168 ordinary shares on Friday at a volume-weighted average price of 2,074.08 pence. The buyback forms part of an ongoing share repurchase programme managed through Morgan Stanley. Reducing shares outstanding typically boosts per-share figures, assuming earnings remain steady. 3
The broader context is the defence sector. European aerospace and defence stocks have jumped this month, fueled by expectations of rising military budgets. BAE Systems has climbed roughly 22% in January, with Saab and Rheinmetall also seeing gains, according to the Financial Times. Nick Cunningham, an analyst at Agency Partners, noted that increased defence spending has pushed share prices up “enormously” over recent years. 4
Buyers have been drawn to the sector despite down days, driven by the spending narrative. Traders see defence stocks, especially those heavy in contracts, as less vulnerable to shifts in consumer demand and more linked to government budgets.
But the rally has set high expectations. Any slip in spending forecasts, or evidence that fresh budget commitments lead to slower orders and squeezed margins, could weigh on a stock that’s already seen a sharp re-rating.
All eyes are on BAE’s full-year results on Feb. 18, which will reveal updates on cash flow, order intake, and its 2026 targets. That date could shift the rally’s momentum in either direction. 5
