Here’s Why BAE Systems Was the Biggest FTSE 100 Faller on Monday

BAE Systems (LON: BA.) was the worst performer in the FTSE 100 on Monday, shedding 4.74% to trade around 1,878p — wiping hundreds of millions of pounds off the company’s roughly £55 billion market capitalisation in a single session.

The primary culprit was a change in geopolitical mood. News of a preliminary US–Iran peace deal flooded markets over the weekend, sparking a broad “risk-on” rally in European equities and sending Brent crude tumbling from $87.00 on Friday to $83.18 by Monday afternoon. For a defence stock that had thrived under elevated geopolitical tension, that shift triggered swift and heavy profit-taking.

BAE was not alone. Shell fell 4.35% and BP dropped 3.27% on the same session, both punished by sliding oil prices. But BAE’s decline was the sharpest, reflecting how much of its recent premium was built on geopolitical risk appetite.

Compounding the pressure was ongoing uncertainty surrounding the Global Combat Air Programme (GCAP) — the next-generation fighter jet project BAE leads alongside Italy’s Leonardo and Japan’s Mitsubishi-backed consortium. The UK government faces a June 30 deadline to approve a £6 billion Defence Investment Plan underpinning the programme, and reports of potential delays have unnerved investors for weeks.

BAE’s valuation also left it exposed. At roughly 28 times earnings, the stock offers little buffer when the macro wind shifts direction.

The company’s fundamentals remain strong — a record £83.6 billion order backlog and full-year guidance intact — but for now, the market is not in the mood to pay a premium for defence.