Shares in Britain’s leading defence and aerospace companies jumped to the top of the FTSE 100 on Thursday morning as fresh US military strikes on Iran stoked demand for companies exposed to global defence spending.
BAE Systems (LON: BA.) climbed 1.55% to 1,995.5p, while Babcock International (LON: BAB) rose 1.50% to 1,081.25p and Melrose Industries (LON: MRO) added 1.19% to 477.2p, with the three so far being the index’s strongest performers.
The gains came after US forces launched a second wave of strikes against Iran within a week, targeting a drone launch site near Bandar Abbas, close to the strategically vital Strait of Hormuz.
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Reports from Iranian state media confirmed explosions in the area, while the Pentagon insisted the action was intended to “maintain the ceasefire” amid an increasingly fragile diplomatic standoff. Tehran responded by striking a US military base.
The renewed hostilities sent investors rushing into defence names. Analysts noted that prolonged conflict in the region is likely to accelerate already-rising NATO defence budgets and fast-track procurement programmes — a direct tailwind for all three companies.
BAE Systems, which recently committed $135 million to upgrade US military facilities, is seen as a key beneficiary of elevated spending, while Babcock’s naval support contracts and Melrose’s aerospace components business are also closely tied to government defence expenditure.
The broader FTSE 100 is subdued, down 0.9% so far on Thursday.
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