Aerospace and defence stocks were making gains on Tuesday afternoon with less than 24 hours to go before the heavily-anticipated Budget Statement from Chancellor George Osborne tomorrow.

In a pre-Budget cabinet meeting today, Osborne and Deputy Danny Alexander said that they intend to cut government budgets by 1.0% per annum over the next two years in an effort to save £2.5bn. These cuts would be on top of the 3.0% spending reductions as part of last year's Autumn Statement.

However, while health, schools and HMRC would be unaffected by the cuts, the Ministry of Defence (MoD) will be benefitting from "exceptional flexibility", according to a Downing Street spokesman.

He said that the MoD will be able to roll over £1.6bn of unspent funds into the next two years.

The news lifted sentiment in the aerospace and defence sector in London with stocks such as Senior, Cobham, Rolls-Royce, Meggitt and QinetiQ performing well.

Meanwhile, BAE Systems, the defence, aerospace and security firm, was given an extra boost after Investec lifted its target price for the stock from 325p to 375p. The broker explained that BAE has re-rated recently as fears about the impact of US sequestration have lessened.


Top performing sectors so far today
Aerospace and Defence 4,759.28 +1.82%
Mobile Telecommunications 4,387.27 +1.49%
Gas, Water & Multiutilities 5,527.63 +1.03%
Electricity 9,315.73 +1.02%
Industrial Transportation 2,757.03 +1.02%

Bottom performing sectors so far today
Industrial Metals & Mining 2,333.61 -5.42%
Mining 18,392.56 -2.79%
Technology Hardware & Equipment 1,096.56 -2.28%
Oil Equipment, Services & Distribution 24,760.23 -1.74%
Industrial Engineering 9,784.55 -1.56%

BC

Related share prices
BAE Systems (BA.) share price
Rolls-Royce Holdings (RR.) share price
Cobham (COB) share price
Meggitt (MGGT) share price
Senior (SNR) share price
QinetiQ Group (QQ.) share price