Change in stock price for Boeing (BA), Northrop Grummon (NOC), General Dynamics (GD), Raytheon (RTN), and Lockheed Martin (LMT) since November 13, the day of the Paris attacks
Europe’s defence industry is set to reap a $US50 billion ($69 million) windfall as the terror attacks on Paris prompt governments to ramp up spending on military capabilities spanning cyber security to fighter jets, armoured vehicles and drones in an effort to defeat Islamic State.
France, where Dassault Aviation’s Rafale fighter jet is made, has halted plans to cut almost 10,000 military personnel, while Germany will spend an extra €8 billion ($11.7 billion) on defence and Britain has earmarked a further £12 billion ($24.9 billion), benefiting companies including BAE Systems. Italy said Tuesday it would devote €1 billion more to security, after the draft budget called for €2 billion of reductions.
European governments are rethinking their defence policies after years of cuts tied to the draw down in Afghanistan and Iraq and austerity programs imposed after the global slump. The spending commitments will swell budgets that had already begun to revive amid heightened tensions with Russia following last year’s annexation of Crimea, with Britain committing in August to spending 2 per cent of GDP on defense.
The spending forecast was made before last night’s incident where Turkey shot down a Russian warplane, further increasing geopolitical tensions.
“Over the 2015-2019 period, an extra $US50 billion will be added to Western European defence spending as a result of changes implemented this year,” said Fenella McGerty, senior analyst for defense budgets at IHS Jane’s. There’ll be an $US11 billion uplift this year, she said, driven by adjustments in France, Germany and the UK that began with the January 7 assault on the Paris offices of French satirical magazine Charlie Hebdo.
The most immediate response to this month’s attacks saw France join air strikes against Islamic State positions in Syria, with bombing sorties led by Dassault’s Rafales, further burnishing the combat credentials of a warplane that’s enjoyed a string of overseas order successes after deployment in Afghanistan, Libya, Iraq, Mali and the Central African Republic since 2007.
Britain may follow suit, extending its anti-IS campaign from Iraq to Syria, following an announcement from Prime Minister David Cameron later this week.
While recent UK bombing missions have been undertaken by aging Panavia Tornado aircraft designed for the task, Cameron confirmed in Monday’s defense statement that Royal Air Force Eurofighters, built by BAE, will get enhanced ground-attack capability, allowing them to play a more active role, and a 10- year life extension that will effectively create two extra squadrons.
When the New York Stock Exchange opened Monday morning, less than three days after Islamic State terrorists attacked in Paris, five leading American weapons manufacturers saw their stock prices jump. Fox Business attributed the bump to a “reaction to the attacks in France.” Over the weekend, French President Francois Hollande had announced that his country would “lead a war which will be pitiless” against ISIS and launched a “massive” airstrike on its stronghold in Syria.
Shares of Lockheed Martin, known for its Hellfire missiles and its lead role in the troubled $1.5 trillion F-35 project, jumped 3.5 percent. Raytheon, manufacturer of Tomahawk missiles used in air strikes against ISIS, climbed 4.1 percent. Northrop Grumman, which in October landed a $55 billion deal to build the next stealth bomber, saw a 4.4 percent rise. Both General Dynamics, maker of F-16s, and Boeing, whose Small Diameter Bombs and Joint Direct Attack Munitions have been used in the air campaign against ISIS, ended the day with increases of 1.9 and 1.3 percent, respectively. On the first day of trading after the Paris attacks, the Dow Jones average rose slightly less than 1.5 percent.
the image above is a bit old now but you get the drift of the story..war is great for war stocks, as it would be..its that simple..
“Over the 2015-2019 period, an extra $US50 billion will be added to Western European defence spending as a result of changes implemented this year,”
and thats just in europe..