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

Good morning. Today we’re covering:

• The surge in Kamala Harris’s election fundraising

• The exchange of fire between Israel and the Iran-backed militant group Hizbollah

• Why Nicolás Maduro’s campaign of repression is “unsustainable” according to the Venezuelan opposition leader

But we start the week with news that rising geopolitical tensions have led to record levels of cash for the world’s largest aerospace and defence companies.

The world’s leading 15 defence contractors are forecast to log free cash flow of $52bn in 2026, according to analysis by Vertical Research Partners for the Financial Times, almost double their combined cash flow at the end of 2021. Five top US defence contractors — excluding Boeing, after its recent problems — are forecast to generate cash flow of $26bn.

The industry is, of course, benefiting from increases in military spending relating to conflicts and tensions in Russia, the Middle East and Asia, but the big question is what the companies will do with the money.

Find out which companies are benefiting and how the industry could choose to spend the money.

Dig Deeper:

• Global race for nuclear weapons at record high, warns UN: The head of the UN’s watchdog has warned that the world’s nuclear non-proliferation regime is under greater pressure than at any time since the end of the cold war.

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

Here’s what else I’m keeping tabs on today:

• The latest in Kyiv, after it was rocked by explosions this morning. There has been a massive aerial bombardment of targets across the country.

• Soldiers from Indonesia, the US, France, Singapore and the UK, which are among the 22 countries participating in joint drills at Indonesia’s Surabaya Naval base in East Java today.

• The latest on the wildfires that blazed through sugarcane fields in northern São Paulo this weekend

• The beginning of the US Open tennis tournament in New York, where Novak Djokovic is bidding for a 25th grand slam.

Thank you for reading FirstFT. Do you have questions about today’s stories or about the newsletter itself? Email us at firstft@ft.com and we’ll answer as many as possible in a special weekend edition. Please remember to include your name and where you’re writing from.

Five more top stories

1. Israel and Hizbollah exchanged fire yesterday with Israel launching a wave of air strikes in southern Lebanon and Hizbollah firing more than 300 rockets at Israel. Our experts explain the military situation and how it could still escalate further.

2. Kamala Harris has raised more than $500mn since entering the White House race, boosted by donor enthusiasm during last week’s Democratic National Convention. News of the figure comes after she brought in four times as much as her rival in July: $204mn compared with former president Donald Trump’s $48mn, according to a Financial Times analysis of federal filings.

3. María Corina Machado, the opposition leader in Venezuela, has told the FT that Nicolás Maduro “wants to sow terror, but it is not sustainable”. Machado said the opposition candidate, retired diplomat Edmundo González — who stood after Machado was banned from running — was the real winner, and that there were thousands of voting tally receipts as evidence. Read the full story.

4. Venture capital group G Squared, which is based in Chicago, has raised $1.1bn for its latest fund. According to founder and managing partner Larry Aschebrook, the company will now have about $4bn of assets under management. Find out more about the company’s plans.

5. Nvidia is expected to announce that its quarterly sales have more than doubled, as Wall Street braces for what has become one of the world’s most closely watched earnings reports.

Don’t miss . . . 

The US national security adviser Jake Sullivan is heading to China this week for talks with Chinese foreign minister Wang Yi. Sullivan has been central to a series of private meetings around the globe, aimed at stabilising relations between the two superpowers. Demetri Sevastopulo reveals the fascinating inside story of the secret backchannel between the US and China.

We’re also reading . . . 

• Warning from Guatemala: After a bruising few months, President Bernardo Arévalo is trying to manage expectations, telling the Financial Times he must tread carefully or risk a political “coup via the courts” carried out by his opponents to try to remove him from office.

• US election hits infrastructure deals: A cool-down in infrastructure deal activity is being blamed on uncertainty over the outlook for green energy subsidies and tariffs, ahead of the November presidential election.

• Big targets for Walmart: The new boss of Walmart Mexico is planning an ambitious ecommerce push to try to double its sales in less than a decade.

• Nigerian scams: The country is keen to help global law enforcement crack down on online “sextortion” after more than 63,000 fake Instagram and Facebook accounts were removed.

Chart of the day

Mining bosses have warned against plunging into the M&A market and repeating mistakes of the past as forecasts mount that the industry is on the verge of a dealmaking boom. “I have no fomo,” Rio Tinto’s chief told the FT, referring to the fear of missing out on deals.

Take a break from the news

Jemima Kelly wonders why we won’t just accept coincidences for what they are . . . 

Additional contributions from Benjamin Wilhelm and Tee Zhuo