Defense Stocks Surge on Trump's $1.5T Spending Plan

Defense stocks surged across global markets in early 2026, propelled by U.S. President Donald Trump's proposal to double military spending to $1.5 trillion in 2027, amid escalating geopolitical tensions from recent U.S. actions in Latin America and threats elsewhere. The rally, which gained momentum on Thursday, January 8, marked the strongest start to the year for the sector since Russia's 2022 invasion of Ukraine, with European and U.K. firms leading gains as investors anticipated fuller order books and sustained budget increases.

In London, shares of BAE Systems, the U.K.'s largest defense contractor, rose 5 percent to close at 2,023 pence, contributing to year-to-date gains of nearly 18 percent. The company's U.S. operations, which accounted for 44 percent of its 28.3 billion pounds in 2024 sales, position it to benefit significantly from any spending hike. BAE expanded its American footprint last year with the 4.4 billion pound acquisition of Ball Aerospace, a producer of military satellites. Other U.K. players followed suit: Babcock International climbed 0.6 percent to 1,450 pence, up 17 percent for the year, while Rolls-Royce advanced 1.1 percent to 1,272.5 pence,...