London-listed defence stocks including Rolls-Royce and BAE Systems shot higher on Tuesday as investors backed the main beneficiaries of Keir Starmer’s £15bn expansion in military spending. The outgoing prime minister unveiled the government’s long-awaited Defence Investment Plan in a speech in Berkshire. He appeared alongside the Chancellor Rachel Reeves and
Michael Hunter
Tuesday 30 June 2026 1:35 pm | Updated: Tuesday 30 June 2026 1:39 pm
London-listed defence stocks including Rolls-Royce and BAE Systems shot higher on Tuesday as investors backed the main beneficiaries of Keir Starmer’s £15bn expansion in military spending.
The outgoing prime minister unveiled the government’s long-awaited Defence Investment Plan in a speech in Berkshire. He appeared alongside the Chancellor Rachel Reeves and Defence Secretary Dan Jarvis.
The broad market rally for the sector contrasted sharply with the political controversy over the plans. Military chiefs had sought twice the amount in the final headline figure.
And Jarvis’ predecessor, John Healy, resigned when Downing Street refused to increase spending as the document was being finalised earlier in June.
But the plans were enough to spark a wide advance for the defence sector, from multi-billion pound names on the FTSE 100 to relative minnows on the Alternative Investment Market.
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Rolls-Royce gained almost 3 per cent to 1,457p. The gains took the jet engine maker’s stock back toward the record high just under 1,533p which it hit last week amid strong demand from investors into the defence spending update.
The Derby-based giant is a major supplier to the Ministry of Defence, providing engines for the Royal Air Force’s C-130 Hercules and the Eurofighter Typhoon. It also designs and makes the nuclear reactors powering the Vanguard and Astute submarines which carry the UK’s nuclear deterrent, which are permanently on patrol at sea.
Read more Starmer stumps up half the amount demanded by defence chiefs
Also on the top-tier index, BAE Systems rose almost 2 per cent to 1,842p.
The £52bn firm is the biggest single supplier to the MoD. It is developing the RAF’s next-generation fighter plane in the Combat Air Programme, or GCAP, being run in partnership with Japan and Italy. It also builds UK submarines at Devonshire Dock Hall in Barrow-in-Furness.
Babcock International rose over 3 per cent to 950p. It supports the army’s 30,000-strong vehicle fleet, from quad bikes to Challenger tanks making sure they are ready to roll at short notice.
On the FTSE 250, Qinetic, which trains RAF pilots and tests crucial weapons systems, was up 2 per cent at 421p
Cohort, an AIM-listed supplier of sonar and other sensors to the military, rose almost 5 per cent to 1,250p.
Also on AIM, Velocity Composites, added almost 8 per cent to 14p. The £7.8m, Burnley-based firm supplies custom carbon fibre materials to military grades.
Overall, the FTSE 350 Aerospace & Defence sub-index tracking the sector was up 2.5 per cent on Tuesday. It outran the FTSE 100’s 0.8 per cent gain and a rise of 0.7 per cent for the FTSE 250.
Read more Starmer scrambles to make savings in bid to boost defence spending
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