Trump bump in defence funding helps to pull BAE out of nosedive
DONALD TRUMP splashing out on the US military has helped steer a “dramatic turnaround” in fortunes at
BAE Systems, City analysts argued to halt its postresults slide.
BAE has seen a “significant improvement” in its growth prospects as the US increases defence spending, Morgan Stanley argued. The US is BAE’S largest market and Mr Trump has earmarked $716bn (£562bn) for next year’s military budget.
The jump in US spending now has bipartisan support in Congress and the budget is likely to remain “robust”, it told clients in an upgrade to “overweight”.
The stronger outlook in the States marks a “dramatic turnaround” in stability, it added.
BAE rallied to the top of the FTSE 100 in early trade before its shares faded, closing 1.2p higher at 626.8p.
Elsewhere, hopes of a bidding war between high street heavyweights Mike Ashley and Philip Day for
Debenhams helped the embattled department store enjoy its best day in over two years.
The Sunday Telegraph revealed that Mr Ashley, Sports Direct’s boss, was mulling a plan to merge Debenhams with House of Fraser, which he bought in a £90m swoop on Friday. Sports Direct is already Debenhams’ top investor with a 27.6pc stake, but could face competition from Mr Day, the owner of Edinburgh Woollen Mill. Takeover speculation swirling around Debenhams lifted it 1.1p to 12.8p. Fellow high street laggard
Dixons Carphone dropped 5.9p to 170.1p after The Sunday Telegraph reported that it was struggling to renegotiate more favourable terms with mobile operators. It is understood that a deal with Vodafone’s British arm will continue on similar terms for two more years, while O2’s current tie-up with Dixons has years left to run.
The deepening crisis in Turkey sent ripples through London’s stock market. Travel giants Tui and
Thomas Cook slipped back on fears that holidaymakers will shun the country’s resorts despite the plunge in the lira. Tui, which expects to take a €35m (£31m) full-year hit from the lira’s slump, tumbled 39p to £15.27, a four-month low, while Thomas Cook dropped 2.6p to 85.3p.
Fund manager Ashmore dived 19.4p to 337.6p as investors reduced their exposure to emerging markets. Investors lost their appetite for DP Eurasia, the Domino’s Pizza franchise serving Turkey and Russia. It plunged 16p to 91p, a record low.
The FTSE 100 avoided the worst of the drop in Europe, sinking 24.56 points to 7,642.45, while the banking sector led European markets lower amid contagion fears from the lira crisis.