Britain's biggest defence companies have gained roughly £4bn in market value since John Healey's surprise appointment as chancellor, with investors betting the former defence secretary will push for higher military spending under new prime minister Andy Burnham. Mr Healey quit Sir Keir Starmer's government last month, accusing ministers of failing to fund defence adequately, and his elevation to the Treasury has been read by markets as a signal that spending constraints could ease. The appointment reportedly caught many Labour MPs off guard, as home secretary Shabana Mahmood had been widely tipped for the role instead.

BAE Systems led the rally, rising 3.23 per cent to add about £1.85bn in value, while Rolls-Royce climbed 1.24 per cent (£1.42bn) and Babcock surged 7.5 per cent (£400m); QinetiQ and Chemring also gained. Analysts noted Healey has previously backed "defence bonds" to fund military investment, though they cautioned that as chancellor he faces competing spending demands across government, making a substantial funding boost far from guaranteed. The sector had already been rallying amid European governments' broader military build-up since Russia's invasion of Ukraine, and attention now turns to Healey's first Budget for confirmation of investors' expectations.