Rolls-Royce (LSE: RR.) shares had one of their best days ever last week. On 1 April, the firm added over £5bn in market capitalisation within 24 hours. The share price move of 6.6% was more akin to a super-volatile penny stock, not one of the FTSE 100‘s largest companies.
What caused the one-day surge? And is it a sign of things to come for the stock? Or is this simply a one-off event that investors should shrug off?
Impact
To explain what happened, we first need to unravel the impact of the conflict in Iran. The 2026 war is affecting companies all over the globe, but few so peculiarly as Rolls-Royce.
On the surface, the heightened tensions might boost the firm’s Defence division. Other British defence stocks like Babcok and BAE Systems have seen an uplift in recent months too.
But the greater issue for Rolls-Royce is the impact of the war on civilian flights and, to a lesser extent, the economy and inflation. A prolonged conflict (along with pricier jet fuel) means fewer flying hours – and that means less cash coming in for maintenance on the engines it sells. A weakened global economy and rising inflation hurt too. This is why the share price is down 19% since the start of the conflict.
That’s why one of the main reasons for the single-day surge was the ‘Trump effect’ of suggesting the war could come to a close soon. The president hinted the war might be ending in the near future (and let’s hope he’s right on that front).
There was more good news on the day as well though…
Notable developments
Another development to note was an order that Rolls-Royce called “one of the largest military orders in the company’s history”. The basic details are that Rolls-Royce will be supplying power packs for 200 personnel carriers for the German military. Such vehicles need reliable power in the most demanding conditions, and that’s where the company’s hi-tech engineering comes in.
This has just been one of a long string of defence orders in recent months for Rolls-Royce. I think it demonstrates two things. Firstly, that governments are starting to get serious about making good on spending commitments to increase the size of their militaries in response to growing threats. And secondly, that the FTSE 100 engineering firm could be set to benefit for years.
I think it’s worth mentioning the boost was also coming on the back of a number of recent broker upgrades and perhaps even the brilliant full-year results in February.
To sum up? It was a great day last week for Rolls-Royce shares, but long-term investors should be looking at longer periods. I think this stock could be one to consider buying for many years and decades.
