Capital Goods Weekly: UK Capital Goods Weekly

Research evidence excerpt

Capital Goods Weekly: UK Capital Goods Weekly

Deutsche Bank Group

Deutsche Numis Research

Europe Industry Date

United Kingdom 15 May 2026

Capital Goods

Capital Goods Periodical

Engineering Weekly

UK Capital Goods Weekly

Richard Paige

Sector comment Research Analyst

+44-20-7545-4606

Sector TSR -1.0% (median -0.4%) vs. UK All-Share 0.6% and FTSE 250 -1.6%.

Average Industrials performance of -0.5% vs. avg. A&D performance of -2.5%. Thomas Elgar, CFA

Research Analyst

+44-20-7541-1556

2026 has so far been a volatile year for share prices. The bifurcation of market

performance YTD has been notable, led by the AI + Semiconductor trade which has

separated itself from everything else with the SOX Index up c.70% YTD. The

dominance of semis is also apparent in the average YTD share price performances

of the key overseas industrials we track by sub-sector. Elsewhere, the YTD

performances within automotive, truck, steel, and process markets are

interestingly very consistent at +12-13%. All are outperforming the MSCI World

Index at +9%. We highlighted the strength of sales growth at US distributors in our

Weekly last week.

The two key laggards therefore are A&D and Life Sciences markets. For the former,

civil aerospace has underperformed more strongly (-4% YTD), not helped by

concerns of jet fuel costs, consumer pressure, and impacts to engine flying hours

given the disruption in the Middle East. In Defence markets, the relative

underperformance, despite the initiation of a new conflict in 2026, likely says a lot

about valuation multiples and the ability of defence supply chains to deliver

stronger rates of growth. For Life Sciences, the YTD underperformance (-16% avg.)

is stark. Since the beginning of 2024, these life sciences names have only