London, 12 January 2026, 08:10 GMT — Regular session
- BAE Systems shares climbed roughly 2% in early London trading, briefly hitting a 52-week peak
- Sweden announced a 15 billion crown investment in air-defence systems, boosting momentum in the sector
- Investors are turning to BAE’s February results for clues on guidance and cash returns
Shares of BAE Systems (BAES.L) climbed in early London trading on Monday, briefly hitting 2,098 pence—their 52-week peak. By 0810 GMT, the stock was trading around 2,095 pence, up roughly 2%. 1
The UK defence group remains on a strong streak heading into mid-January. Its shares have jumped about 20% since closing on Dec. 31, as investors favor contractors tied to government spending over those dependent on consumer demand. 2
Sweden gave the budget narrative a push this weekend, announcing a 15 billion Swedish crown ($1.6 billion) investment in air-defence systems. Defence Minister Pal Jonson pointed to the Ukraine conflict, saying, “The experience from the war in Ukraine clearly shows how crucial a robust and resilient air defence is.” 3
BAE last pointed to a supportive environment but hasn’t updated investors this month. In its November trading statement, the firm reaffirmed its 2025 targets: 8% to 10% sales growth and 9% to 11% growth in underlying EBIT. It also forecast free cash flow exceeding £1.1 billion. The company expects to return about £1.5 billion to shareholders in 2025, including roughly £500 million in share buybacks. Preliminary results are slated for Feb. 18. 4
Chief executive Charles Woodburn said at the time the firm was “confident in the outlook,” pointing to a strong order backlog and “continued investment to support our future growth.” For investors, that backlog means work already contracted but still pending delivery.
European peers like Saab, Rheinmetall, and Leonardo have surged in this trade, driven by strong demand for air defence and munitions. For many funds, the sector now serves as a go-to “geopolitics hedge,” even when general equity appetite wanes.
Traders are expected to focus more on order flow than headlines alone. While large budget announcements hit the news fast, it’s the timing of contracts, delivery schedules, and shifts in programmes that actually determine when revenue arrives.
But with shares pushing near the top of their recent range, there’s little margin for error. A slowdown in contract awards, production hiccups, or weaker cash conversion could quickly weigh on the stock.
Macro noise added to the jitters Monday as Federal Reserve Chair Jerome Powell revealed the Trump administration threatened him with a criminal indictment, sparking fresh concerns over central bank independence. “Trump is pulling at the loose threads of central bank independence,” said Andrew Lilley at Barrenjoey. U.S. inflation figures and the kickoff of big-bank earnings this week could shift risk appetite sharply. 5
