Shares in top FTSE 100 defence stocks were boosted on Thursday morning, following President Trump’s push for a 50 per cent boost to the US military budget.
BAE Systems shares shot up 6.7 per cent following the market open to highs not seen since October, while Babcock rose by more than 2.2 per cent.
President Trump is pushing for military spending to hit $1.5tn (£1.1tn) in 2027, $500bn (£371bn) more than the current budget, which was pushed through by Congress in December.
In a frenzied series of Truth Social posts overnight, Trump pledged that this colossal cash injection would enable the US to build the “dream military” in “these very troubled and dangerous times”.
The comments came just hours after American forces seized a tanker in the North Atlantic. European governments, diplomats and defence stocks are braced for an escalation of Trump’s ongoing threats to acquire Greenland for the US.
Sir Keir Starmer spoke to Trump on Wednesday night for the first time since a whirlwind week in foreign affairs.
A mixed picture for defence giants
The US leader turned up the heat on the defence sector itself. On Wednesday, the US leader announced restrictions on defence bosses’ pay until investments in the US are ramped up.
Trump said on Truth Social: “Executive pay packages in the Defence Industry are exorbitant and unjustifiable given how slowly these companies are delivering vital equipment to our Military, and our Allies.”
He added: “Therefore, I will not permit dividends or stock buybacks for defence companies until such time as these problems are rectified.”
“MILITARY EQUIPMENT IS NOT BEING MADE FAST ENOUGH! It must be built now with the dividends, stock buybacks, and over compensation of Executives, rather than borrowing from financial institutions, or getting the money from your government.”
“Longer term, this is good for both Executives and Shareholders, because it will be GREAT for our Country!”
He lashed out at NATO allies, of which “most weren’t paying their bills”, adding: “We will always be there for NATO, even if they won’t be there for us.”