European defense stocks on Wednesday were among the clear winners of Donald Trump's shock Presidential victory on hopes of increased defense spending by the world's No. 1 economy.
Shares in BAE Systems, which manufactures military hardware ranging from bullets to battleships and counts the U.S. as its largest customer, rose by more than 4%, to trade as high as 571 pence ($6.33).
Shares in Cobham, which manufactures communications and monitoring equipment for military customers worldwide, rose by more than 6% to reach 155.0 pence before paring gains.
Meggitt, an engineering firm that manufactures components for aircraft, rose by nearly 2.5% to touch a high of 441.7 pence. The Bournemouth, England-based company earns 35% of revenue from military spending.
Thales' stock rose by close to 5%. The firm develops vehicle-based electronic systems for a range of industries, but 50% of its revenue come from sales of military equipment to governments.
Another big winner was Ultra Electronics, a systems and software developer that takes 60% of sales from military customers across the world.
The stock was up more than 5% during morning trading, trading as high as 1,916.0 pence.
Jefferies aerospace analyst Sandy Morris noted that Trump has called for for 90,000 additional active-duty army soldiers, 42 more navy ships, 100 more modern fighter aircraft, and increased nuclear and missile defense.
"With Congress remaining Republican controlled, it is more likely increased defense spending could be enacted. The Center for Strategic and International Studies has estimated Mr Trump's defense aims would costs around an additional US$80bn per annum, c0.5% of GDP," Jefferies noted.