Europe stocks close slightly higher; BAE Systems up 4.7% after UK increases defense spending
European stocks edged higher on Tuesday as corporate earnings and geopolitical developments remained in focus.
The pan-European Stoxx 600
closed 0.15% higher, pulling back from earlier highs and continuing the narrow trading range seen this week.
The U.K.’s biggest defense company BAE Systems closed up 4.7% after U.K. Prime Minister Keir Starmer pledged to spend an additional £13.4 billion every year from 2027 on defense.
In a Tuesday address to parliament, he added that the government plans to raise defense spending to 2.5% of GDP by 2027, noting “the biggest sustained increase in defense spending since the end of the Cold War.”
Matt Dorset, equity analyst at Quilter Cheviot, said BAE Systems was likely the biggest beneficiary of the news with 26% of its sales originating in the U.K. He also named Qinetiq, Babcock and Chemring as names to watch.
In other corporate news, Novo Nordisk gained 3%. On Monday, American telehealth firm Hims & Hers said in its earnings call that it may stop selling compounded semaglutide — an alternative to weight-loss drugs like Novo Nordisk’s Ozempic and Wegovy.
Medical devices manufacturer Smith & Nephew, meanwhile, gained 6% after the company reported a 4.7% year-on-year increase in revenue for 2024. It cited its “transformative 12-point plan” as driving the performance and said revenue growth for 2025 was expected to be around 5%.
Germany’s DAX index initially continued its upward trend on Tuesday following the result of the German federal election, though slipped in late deals to close 0.13% lower.
The conservative Christian Democratic Union and the allied Christian Social Union (CDU/CSU) secured the largest share of votes in the election on Sunday, with the alliance’s candidate Friedrich Merz set to take over from Olaf Scholz as chancellor of Europe’s largest economy.
Across the Atlantic, U.S. President Donald Trump on Monday said that tariffs on Canadian and Mexican goods “will go forward,” when a 30-day reprieve on the levies expires next week. The president also doubled down on his plans to impose so-called reciprocal tariffs on America’s trading partners.
Asia-Pacific markets traded lower overnight after Wall Street fell Monday, as Trump tariffs stoked a risk-off mood.
On Wall Street, the S&P 500 was trading in the red for a fourth day, taking a leg lower after the Conference Board’s consumer confidence survey came in much weaker than economists’ estimates.
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