Shares in BAE Systems PLC (LSE:BA.) and Babcock International PLC (LSE:BAB) plunged over 5% and 7% in Monday morning trading as stock markets continued to react to US tariffs imposed by Donald Trump, reactions from other countries and what the economic fallout could be.
The drop in BAE shares pared back recent gains but only returns the stock to levels seen in early February, reducing its 12-month gain to 8%, but up over 140% since the start of the war in Ukraine.
A blanket 10% US tariff came into effect over the weekend, with further rounds due this week, triggering a broad risk-off mood in markets.
European defence stocks were under pressure, with Germany’s Rheinmetall down over 20% at one point, while other London-listed names QinetiQ, Melrose, Senior and Chemring were all down over 7%.
BAE’s shares had climbed recently following pledges from Kier Starmer and European leaders to raise defence budgets in response to geopolitical tensions.