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Let's look us some of the stocks on the move today in Europe on Caroline Hepker with Lizzie Burton, and we're joined by Bloomberg reporter Chloe Malay. The defense stock rally here in Europe. BAE Systems one of the big winners. What is prompting what is a very significant surge.
It's all about Trump. So Trump said that he wanted to increase the US military budget, and it's not a small booster. He's is requesting an increase of more than fifty percent in annual defense spending for twenty twenty seven and he said that that would be paid for by the tariff revenue that was accumulated over the last year. And so this is something that really really boosted Asian defense stocks and now we are seeing the same with the European names as well. Bea is really driving at
that rally. This is a company that generates almost half of its revenue in the US, so it is much more exposed than some of those other defense names. And we also know, of course that Trump has previously been a little bit more warm to the UK and he has been to continental Europe, so that might play into that as well. But we're really seeing positive movements across the board. We have Ryan Mittel, also, Bileonardo also up, all of those defense names definitely in the green today.
It's also worth noting, of course, that the continued heightened geopolitical tensions that we've got with the Venezuela situation still unfolding, is also really helpful for that defense straight so that's another boost.
Look, I think it's worth saying that there are big caveats, aren't there around President Trump and that request that Congress increase the Pentagon's budget by this enormous amount. You know, I just sort of I'm thinking about the numbers. The
US already spends almost a trillion dollars on defense. For the UK it's about sixty billion, and versus even versus China with its military, you know, they're not thought to spend anywhere near what the US does, So I think globally the number is absolutely huge, isn't it that we're thinking about? Anyway, that was on my mind Lizzie.
No, it's really helpful perspective. Let's get back to the individual stocks. The Swiss French recruitment company A Deco Chloe is facing a drop this morning. What does that tell us about the broader labor market trends?
Well, the business of recruitment isn't the best business to be and perhaps at the moment, given that we're in quite a tight labor market, companies are hesitant to spend and candidates are also hesitant to move jobs as well.
And so Jeffrey's analysts downgraded three names in that recruitment sector in Europe this morning, so Ranstaed hayes Enodecco in particular, and A Decco was the one that moved the lowest this morning, but all three were weaker So and I said that those recruiters are facing a really cloudy outlook in twenty twenty six and that they'll be facing both cyclical headwinds and that will be exacerbated by structural new structural challenges and there should really keep a lid on
earnings at this year. So this is not great news for a sector that's already had a tough twenty twenty five. A tough twenty twenty four, you know, there'll be certainly even more pressure going forward. And AI is also another big threat, first of all because of the impact on the labor market itself, but also because it can make the need for recruiters as an intermediary a bit more redundant as well. So definitely want to keep an eye on.
Okay, now we've had a number of reports out for UK businesses. There's a profit warning too from AB Foods today. Why and how are the markets reacting to that?
Well? AB food shares are down quite a lot this morning on the back of that profit warning. So AB Foods has consists of Primark, but then also a range of food businesses, including brands like Reveta, Crackers, King's Mill, Bread, et cetera. And it's said this morning that kind of everything was weak, but Primmark in particular struggling in continental Europe and in the US. It's doing a little bit better in UK, but definitely not as well as we
could have expected. After we saw the numbers from Next earlier this week, it seems that perhaps that really good performance from Next wasn't as indicative of a broader health of the UK high street as we might have hoped, and the profit warning also comes at a really pivotal time for Abe Foods. It announced that it was considering a splitting Primark from the rest of that business last year, and that decision is expected to be coming in the next few months, by April, so let's keep an eye
on that as well. With that news of the profit warning in mind as.
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