BAE Systems and Babcock shares jump as Iran war jolts markets and lifts defence spending bets
Shares of BAE Systems surged 6.1% on Monday, with Babcock International up 1.7%, defying a broader London selloff as investors responded to the escalating conflict involving Iran and the prospect of increased defence budgets. The FTSE 100 dropped 1.2%, market data showed. Citi’s Charles Armitage noted that BAE, with roughly half its revenue tied to the U.S., stands to benefit most from any boost in American defence outlays. Defence stocks surged after Iranian counterstrikes upended shipping in the Strait of Hormuz, sending oil sharply higher and triggering a sell-off in risk assets. The weekend airstrikes by Israel and the United States killed Iran’s Supreme Leader Ayatollah Ali Khamenei. “If the issues persist, the market will start to worry about new inflationary pressures,” said Dan Coatsworth, head of markets at AJ Bell, citing the threat of rising energy prices pushing back near-term rate cuts.