Defence shares on both sides of the pond edge up as Donald Trump promises to “spend big”
US share indexes hit record highs this afternoon, with defence and infrastructure companies on both sides of the Atlantic edging up after it emerged Donald Trump is set to hike spending in the sector by $54bn (£43bn).
The Associated Press reported Trump was planning to increase the defence budget by 10 per cent, as well as promising to "start spending on infrastructure big". It already spends close to $600bn on defence, more than any other country.
Both the S&P 500 and the Dow Jones hit record highs, at 2,368 points and 20,834 points respectively – although both later turned negative.
London-listed defence stocks edged higher on the news, with BAE Systems climbing to 617.5p, while Rolls-Royce rose to 770p, its highest since November. Qinetiq rose to 276p, while Meggitt rose to 417p.
Across the pond, Lockheed Martin rose 1.4 per cent to $268.02, while Raytheon rose 1.6 per cent to $155.94.
Back in December, Trump wiped billions off the value of Lockheed after he tweeted the defence giant's F-35 programme was "out of control".
The F-35 program and cost is out of control. Billions of dollars can and will be saved on military (and other) purchases after January 20th.
— Donald J. Trump (@realDonaldTrump) December 12, 2016
"[Trump's comments] helped pull European markets back into the green, offsetting concerns about the potential unravelling of a major M&A deal," said Michael Hewson, chief market analyst at CMC Markets.
However, he added Trump's "big" infrastructure plan may come later than anticipated.
"Hopes that the President may sketch out the framework of a tax plan took a knock after he admitted that he could not make an announcement until after a revamped proposal for Obamacare was complete."
Read more: Trump has a corporate tax reform. It's the best reform. It's phenomenal.