UK defence stocks climb as Britain’s new chancellor John Healey takes office

UK defence stocks climbed sharply on Tuesday as John Healey, the newly appointed chancellor of the exchequer, began his tenure. The shift followed Prime Minister Andy Burnham's unexpected decision to name Healey, who previously served as defence secretary under Keir Starmer’s government, to head the Treasury. Healey had resigned from his role due to dissatisfaction with the level of defence spending announced by the previous administration. His appointment appeared to signal renewed confidence in the sector, prompting notable gains among London-listed defence companies. London’s FTSE 100 closed 0.6 per cent higher at 10,585.91, reflecting broader market optimism. During the day, the UK’s precious metals sector saw substantial gains, driven by a rise in gold prices. Gold traded at $4,077.93 per ounce on Tuesday, up from $4,011 the previous day. This upward trend supported shares in major producers such as Antofagasta, which surged 5.8 per cent, and Fresnillo, which climbed 4.4 per cent. Similarly, Endeavour Mining ended the session 3.8 per cent higher. Oil majors BP and Shell also posted gains exceeding one per cent, as crude prices hit a five-week high following intensified clashes between the United States and Iran. Defence stocks specifically reflected heightened expectations. Shares of Babcock International rose 4.1 per cent, Qinetiq gained 3.1 per cent, and BAE Systems increased by 1.8 per cent. These movements underscored investors' anticipation of potential policy shifts under Healey’s leadership, particularly regarding national security and military expenditure. In his first address to Treasury staff, Healey emphasized his commitment to fiscal discipline, stating that maintaining economic stability would be his “first duty.” He also expressed a desire to foster “new hope” for Britain, suggesting a forward-looking approach to governance. In Dublin, the Iseq All-Share Index edged up 1.8 per cent to close at 13,691.82. Financial institutions led the gains, with AIB recording a 4.76 per cent rise to €10.86, while Bank of Ireland’s shares climbed 4 per cent to €18.29. Kenmare Resources mirrored AIB’s performance, with its shares increasing by 4.76 per cent to €2.20. However, some sectors faced declines. Shares in Irish Continental Group fell 1.25 per cent to €6.30, while food firms Kerry Group and Glanbia saw drops of 0.97 per cent and 0.61 per cent, respectively. Meanwhile, filings indicated that Fidelity Investments’ FMR LLC had boosted its stake in Cairn Homes to 6.1 per cent, up from below 5.8 per cent at the start of the month. Across Europe, stock markets rebounded, ending the week on a positive note. European indices closed at 643.19 points, marking a 0.6 per cent increase and breaking a two-day losing streak. Technology stocks led the charge, with Dutch semiconductor firms ASMI and ASML posting gains of 5.4 per cent and 4.7 per cent, respectively. The improved sentiment was partly attributed to gains in mining shares and a temporary distraction from ongoing tensions in the Middle East, which had previously contributed to volatility. Conversely, building materials firm Wienerberger saw a sharp drop of 4.1 per cent, reaching levels not seen since 2022, following a full-year profit warning linked to declining new-build activity. Swiss bank Julius Baer also declined 4 per cent despite reporting better-than-expected first-half net inflows, while lift manufacturer Schindler fell 5.4 per cent after missing quarterly sales forecasts. In New York, early afternoon trading saw broad gains, with the Dow Jones rising 0.7 per cent, the S&P 500 climbing 0.8 per cent, and the Nasdaq surging 1.2 per cent. This recovery followed three consecutive days of losses for the major indices. Brent crude prices also rose to $91.36 per barrel, up from $88.07 the prior evening, as Iran escalated attacks in the Middle East, marking two weeks of renewed hostilities with the United States. Investors will soon turn their attention to earnings reports from Alphabet and Intel, which may provide insight into the sustainability of the AI-driven growth narrative amidst elevated profit expectations. Additionally, concerns remain over potential trade policies, as U.S. President Donald Trump hinted at imposing 50 per cent tariffs on Canadian imports.