MARKET REPORT: BAE shares boosted by £4bn MoD nuclear sub contract

BAE has secured a multi-billion-pound Ministry of Defence contract, which boosted shares.

The FTSE 100 defence giant rose 1.1 per cent, or 11.2p, to 1009p after Defence Secretary Grant Shapps said over the weekend that the firm would receive nearly £4billion to develop ‘the most powerful attack submarines ever operated by the Royal Navy’.

He added that the investment would support thousands of jobs, mostly in the North-West.

The first batch of submarines, known as SSN-AUKUS, is scheduled to be delivered in the late 2030s and will be operated by the UK and Australian navies.

It forms part of a joint programme formulated as part of the AUKUS security pact between the US, Britain and Australia.

Sub contract: BAE rose 1.1% after Defence Secretary Grant Shapps said BAE would get nearly £4bn to develop ‘the most powerful attack submarines ever operated by the Royal Navy’

But Russ Mould, investment director at AJ Bell, noted that there was ‘no information’ on whether the £4billion price tag on the deal was ‘simply covering the costs of doing the work’ or whether BAE would make a profit.

BAE shares have risen by over 25 per cent over the last 12 months as the Farnborough-based group has cashed in on a rise in global defence spending following the Russian invasion of Ukraine.

The company has also been using the demand boost to expand the influence of the UK’s defence industry. 

Last month, boss Charles Woodburn appeared to open the door for Saudi Arabia to join the UK’s flagship Tempest fighter jet programme. 

The project, which also includes Italy and Japan, is aiming to develop a new prototype jet for launch in 2027.

The FTSE 100 slipped 1.3 per cent, or 97.36 points, to 7510.72 and the FTSE 250 dropped 1.7 per cent, or 302.13 points, to 17977.29. 

Despite receiving a bump early in the session, London’s blue chips dropped into the red following bleak data from the housing market.

Stock Watch – Thruvision

Body scan security firm Thruvision is set to miss sales guidance after US government budget challenges meant it did not receive an expected order from the country’s border forces.

Shares plummeted 11.7 per cent, or 3.4p, to 25.6p.

Thruvision said it will see a ‘material impact’ to its financial performance over the second half of the year, and full-year results as a whole, after it was not awarded an order from US Customs and Border Protection (CBP).

Nationwide flagged that prices were down 5.3 per cent year-on-year in September as higher interest rates continued to weigh heavily on demand.

The news hit housing stocks with Persimmon down 3.8 per cent, or 40.5p, to 1037p, Barratt Developments slipping 3 per cent, or 13p, to 428.1p, Berkeley Group falling 2.7 per cent, or 109p, to 3998p and Taylor Wimpey dipping 1.5 per cent, or 1.7p, to 115.6p.

Among the mid-cap builders, Crest Nicholson slid 0.9 per cent, or 1.6p, to 172.1p, Redrow lost 2.4 per cent, or 12p, to 482.8p, Bellway shed 2.7 per cent, or 62p, to 2222p and Vistry Group fell 2.9 per cent, or 26.5p, to 885.5p.

The major water firms received a boost after outlining plans to invest £96billion in the waterways amid growing anger over sewage discharges and leaks.

The prospect of higher bills helped lift shares in United Utilities by 0.3 per cent, or 2.4p, to 950.6p and Pennon by 3.8 per cent, or 22.5p, to 608.5p but Severn Trent edged down 0.7 per cent, or 16p, to 2349p.

Mining group Antofagasta lost 1 per cent, or 14p, to 1415p despite analysts at Citigroup upgrading their rating on the stock to ‘buy’ from ‘neutral’ while upping the target price to 1,700p from 1,500p.

Shares in electricity control group XP Power plunged 51.8 per cent, or 1222p, to 1138p in the wake of a profit warning.

The firm, which makes components including converters for the medical and industrial sectors, said trading in its third quarter had been below expectations due to weaker demand and customers pushing orders back into next year. As a result, the company predicted its 2023 profits would be ‘broadly similar’ to last year.

Broker Peel Hunt inched up 0.6 per cent, or 0.5p, to 83.5p following an upbeat trading update.

The groups said revenues rose 3.2 per cent to £42million for the six months to the end of September despite what it said was a ‘prolonged period of adverse market conditions’.

This post first appeared on Dailymail.co.uk