Defence contractors and housebuilders were highlighted by JPMorgan as analysts at the US investment bank examined the sector impacts of Rachel Reeves' Spring Statement.
The Chancellor announced £10 billion in fiscal tightening and, as well as confirming Prime Minister Kier Starmer's promise to increase defence spending to 2.5% of GDP, an additional £2.2 billion in defence spending was announced for the 2025/26 fiscal year.
Indeed, JPMorgan estimates defence sector spending will now rise around 9% year-on-year from this year, into the two following years.
The bank, which has 'overweight' ratings on the three UK defence names it covers – BAE Systems PLC (LSE:BA.), Babcock International PLC (LSE:BAB) and QinetiQ Group PLC (LSE:QQ.) – noted that Qinetiq was the biggest share price mover on the day.
Qinetiq rose as the government's press release specifically said that some of the new funding would be "invested in fitting Royal Navy ships with directed energy weapons five years earlier than planned". Qinetiq is collaborating with missile company MBDA to develop the 'DragonFire' laser programme.
JPMorgan noted "limited" new measures for the housing sector. It said this may have disappointed investors awaiting demand-side stimulus.
Previously announced support, including £2 billion for affordable housing and a £625 million construction skills package, was reiterated, which gave a boost to Vistry Group PLC (LSE:VTY).