The victory of Republican Party in the US presidential election has soared the defense stocks all around the world.
The US firms - Northrop Grumman, Lockheed Martin and Raytheon have gained about 5.4 percent, 6 percent and 7.5 percent rise in their shares, respectively, after the results were out, CNBC reports. Newly elected US President Donald Trump’s commitment to increase military spending in this year’s campaign is likely to give offset a preference for US contractors.
Meanwhile in European market, U.K. companies like BAE Systems and Cobham as well as French company Thales saw their shares rising from 3 to 4 percent.
In Asia, Japanese defense stocks Tokyo Keiki, which makes electronics for jet fighters, and Ishikawa Seisakusho, which manufactures naval mines, leapt 18% and 14% respectively in afternoon trading Wednesday. Shares in Korea Aerospace Industries Ltd., a major Korean contractor, rose 1.9% against a 2.3% fall in the wider market, The Wall Street Journal reports.
In September speech, Trump had called for 90,000 additional soldiers, 42 more Navy ships and 100 more modern fighter aircraft as well as increased nuclear and missile defense.
However, defense companies might have to wait until it can start eyeing US government cash. "The first Department of Defense budget that the Trump Administration can really change would be FY19, as FY17 is almost done, and the FY18 request is due out in February of next year," Robert Stallard of Vertical Research Partners was quoted as saying by CNBC.