Defence groups set to rake in record cash as military spending soars

Good morning. We begin the week with updates on hostilities within the Center East and Ukraine, together with a visible deep dive into Ukraine’s Kursk incursion.

The conflicts have led to a surge in money for the defence trade, which is benefiting from a pointy improve in authorities orders for brand new weapons, our high story reveals.

The world’s main 15 defence contractors are forecast to log free money circulate of $52bn in 2026, in accordance with evaluation by Vertical Analysis Companions for the Monetary Instances — nearly double their mixed money circulate on the finish of 2021. 

In Europe, nationwide champions BAE Methods, Rheinmetall and Sweden’s Saab, which have benefited from new contracts for ammunition and missiles, are anticipated to see mixed money circulate bounce by greater than 40 per cent. Here’s how the industry could spend its record levels of cash.

• Defence start-ups: Y Combinator, the San Francisco incubator that launched Airbnb, Reddit and Stripe, is backing a weapons company for the primary time.

Right here’s what else I’m maintaining tabs on in the present day:

• Financial information: Ifo publishes its enterprise local weather index for Germany, whereas Spain releases its July producer worth index.

• Markets closed: England, Wales and Northern Eire observe the summer season financial institution vacation.

Thanks for studying. Do you may have questions on in the present day’s information on the defence trade, or about FirstFT? E mail us at firstft@ft.com or hit “reply” and keep in mind to incorporate your identify and the place you’re writing from. We’ll reply as many as potential in a particular weekend version of the publication.

5 extra high tales

1. Israel’s army launched a wave of air strikes in southern Lebanon yesterday in what it stated was an try and foil an “intensive assault” by the Hizbollah. The sharp escalation of hostilities between Israel and the Iran-backed militant group was their biggest exchange of fire since they fought a 34-day warfare in 2006.

2. Telegram says its chief govt Pavel Durov “has nothing to cover” after he was arrested in France, prompting criticism from Russian lawmakers. The Russia-born billionaire, a twin French-Emirati citizen, was arrested on the Paris-Le Bourget airport after French authorities started a preliminary probe into whether or not a lack of moderation on his platform had facilitated criminal activity.

• Struggle in Ukraine: A member of a Reuters information crew was killed and two others had been injured after a Russian missile attack on their lodge within the japanese Ukrainian metropolis of Kramatorsk.

• Russian finance: A posh scheme to swap Russian and western buyers’ frozen belongings has met less than 10 per cent of the Kremlin’s authentic goal.

3. Central bankers left their Jackson Gap gathering cautiously hopeful a few smooth touchdown for the financial system as they now flip their consideration to reducing borrowing prices. The heads of each the Federal Reserve and the Financial institution of England signalled they had been nonetheless on target to keep away from a worldwide recession. However here’s why challenges remain to correctly pacing rate cuts.

4. Unique: Ikea has launched a peer-to-peer market for secondhand furnishings to tackle the likes of Ebay, Craigslist and Gumtree. The platform will probably be examined in Madrid and Oslo till the tip of the yr with the intention of rolling out the shopping for and promoting platform globally. Here’s what Ikea Preowned means for the Swedish retailer.

5. China’s tech giants have doubled capital spending this yr as they splurge on AI infrastructure regardless of US sanctions. Alibaba, Tencent and Baidu stated the main focus was on shopping for processors and {hardware} associated to powering the coaching of enormous language fashions for synthetic intelligence. Read the full story.

• US-China relations: After a Chinese language spy balloon flew over the US final yr and despatched ties to a low level, a secret backchannel stabilised relations. The Monetary Instances reveals how this channel took place and the details of how it operated.

Visible story

For months, Ukrainian forces had been dropping floor to Russia and morale was low. Then on August 6, they blasted by the border to develop into the primary international military to grab Russian territory because the second world warfare. In 10 days Kyiv’s forces turned the tables, remodeling the Kursk area right into a warfare zone. Our newest visible story explores how they pulled off a spectacular counterpunch against Moscow.

We’re additionally studying . . . 

• Rise of ‘the remaining’: An rising market revival has begun, writes Ruchir Sharma, however buyers have but to take heed of the dramatic global implications.

• Nuclear arms race: The world’s nuclear non-proliferation regime is under greater pressure than at any time because the finish of the chilly warfare, the pinnacle of the UN’s watchdog advised the FT.

• Société Générale: Shares have fallen 19 per cent since chief govt Slawomir Krupa introduced his technique of focusing on capital rather than growth.

• Nigerian scams: The nation is eager to assist international legislation enforcement crack down on online “sextortion” after greater than 63,000 faux Instagram and Fb accounts had been eliminated.

Chart of the day

Mining bosses have warned towards plunging into the M&A market and repeating errors of the previous as forecasts mount that the trade is on the verge of a dealmaking increase. “I have no fomo,” Rio Tinto’s chief advised the FT, referring to the concern of lacking out on offers.

Take a break from the information

What occurred to having a “brat” summer season, the temper set by Charli XCX’s chartreuse-coloured album of the identical identify? Now everybody’s speaking about being “very demure, very aware”. TikTok memes could also be foolish, writes Jo Ellison, however they’re the great social emollient of our times.

Extra contributions from Benjamin Wilhelm