Sector movers: Defence stocks gain after US budget

11th Dec 2013 15:45

Aerospace and defence stocks were on the rise on Wednesday after a budget deal in Washington removed some uncertainty in the sector, which is heavily dependent on state funding in the States.Chief Congressional negotiators Senator Patty Murray and Representative Paul Ryan last night worked out a deal over spending for the next two years, reducing the sequester cuts that were scheduled to take place. The budget still needs to be passed in both the Senate and the House. "This deal doesn't solve all of our problems, but I think it is an important step in helping to heal some of the wounds here in Congress," Murray said.British defence contractor BAE Systems was among the best performers in the sector in London, rising 2.46% to 425.6p. Sector peers Ultra Electronics, Chemring, Cobham, QinetiQ, Senior, Rolls-Royce and Meggitt were also in demand.If passed, the budget deal will end three years of impasse and fiscal instability in Washington that culminated in October with a partial government shutdown. The budget comes before a non-binding Friday deadline and more than a month before the January 15th date when existing funds to run many federal programmes expire.According to analyst Michael Gapen from Barclays, the agreement will cut the estimated drag from fiscal policy next year in half and, if passed, "would lead to a modest direct boost to gross domestic product (GDP) and some upside risk to our forecast of 2.4% for real GDP growth in 2014".He said that the deal "essentially locks in sequester-level spending, with modest adjustments, and provides a higher degree of clarity on the federal budget than has been the case in recent years".Top performing sectors so far todayAerospace and Defence 5,157.54 +1.40%Electricity 8,929.09 +1.04%Fixed Line Telecommunications 4,304.43 +1.00%General Retailers 2,671.57 +0.72%Travel & Leisure 6,932.00 +0.62%Bottom performing sectors so far todayForestry & Paper 10,141.23 -3.44%Industrial Metals & Mining 1,276.24 -1.26%Mining 15,739.95 -1.22%Beverages 14,015.68 -0.87%Food Producers & Processors 7,011.32 -0.81%BC