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Market report: Lockheed deal gives BAE a lift

Louis Ashworth
·2-min read
F-35 - SAC Will Drummee
F-35 - SAC Will Drummee

 A contract win lifted BAE Systems on Monday, sending its shares up 12.2p to 520.2p. The FTSE 100 group won a contract with Lockheed Martin, the US defence giant, to produce additional electronic warfare system parts for the F-35 Lightning II aircraft.

BAE has already delivered more than 500 EW systems for the fighter jets, matching Lockheed’s airframe production.

Deborah Norton, BAE’s vice-president for F-35 solutions, said: “This contract underscores our partnership with Lockheed Martin and our collective commitment to deliver affordable, sustainable and world-class electronic warfare systems to combat evolving threats.”

London’s blue-chips barely shifted during the session, held down by a slight rise in the pound that weighed on energy and mining groups.

Sterling was up about 0.6pc against the dollar at the European close, clawing back some of the value lost over a painful period for the currency – which has been battered amid the turmoil over the Government’s latest Brexit moves. Shares in online grocer Ocado rose 89p to £23.55, putting it among the blue chip index leaders, ahead of a quarterly sales update on Tuesday.

The group was buoyed by an upbeat report from Bank of America, which raised its price target to £34.60 and said it could target deals in at least 28 more countries. Meanwhile, Credit Suisse said Ocado’s growth should be “well above consensus”, but warned the market may be overestimating its expansion potential.

Pharmaceuticals giant AstraZeneca failed to hold on to early gains as it resumed clinical trials of its Covid-19 vaccine in the UK, closing down 29p at £84. BP also fell, 4.95p to 257.1p, after the oil giant forecast that fossil fuel demand would fall faster than it had expected due to the coronavirus epidemic and climate policies.

Catering group Compass shrugged off some downbeat commentary to rise 40p to £13.14p. Analysts at J P Morgan said the company’s performance was likely to remain “sluggish” during September, with a recovery in business volumes likely to “drag on for months” as many offices remain closed.

Burberry edged 9.5p higher to £15.60 after pricing its debut sustainable bond amid a string of debt sales across Europe.

On the FTSE 250, G4S popped 36.6p higher to 182.5p, its largest daily rise, after Canadian security group GardaWorld launched a £3bn takeover bid for the outsourcer.

Fellow mid cap Royal Mail wiped out most of Friday’s gains, dropping 8.7p to 225p after hitting a one-year high last week following a strong performance in its parcels business. Elsewhere, recruiter SThree firmed 3.5p to 250p after reporting that its performance has been improving since the first half of the year.