CAC 40 Edges Higher Ahead of Fed Policy Announcement

Federal Ammunition, Mossberg and Palladyne AI Corp. announced the joint development of SwarmShot, a modular autonomous airborne counter-unmanned aircraft system designed to turn compatible drones into reusable air-to-air interceptors operating as a collaborative kinetic defensive swarm. SwarmShot will combine Federal's specialized counter-UAS shotshell ammunition, a lightweight Mossberg weapon module purpose-engineered for airborne operation, and Palladyne AI's IntelliSwarm autonomy system, which pairs BRAIN avionics with SwarmOS collaborative autonomy software. The system will first be developed as a modular mission add-on for Gremlin-X, Palladyne AI's Group 1 quadcopter mini-bomber, after which the companies plan to offer SwarmShot to other manufacturers as an integration kit for compatible unmanned aircraft. Federal will lead ammunition design and terminal-effect optimization, drawing on its recent U.S. Army counter-UAS ammunition contract, while Mossberg leads the airborne weapon module and Palladyne AI leads UAS integration, fire control, terminal-intercept autonomy and multi-interceptor coordination. The effort is a defensive application of Palladyne AI's predictive autonomy collaborative swarming capability, recently deployed with the U.S. Army at Project Convergence Capstone 6 and other Army exercises. Development schedules, potential customer engagements and financial terms were not disclosed.

Pete Hegseth, the US Secretary of Defense, announced the launch of Project Meridian, a research program into the technology and warfare models of the future, bringing in Elon Musk, Palmer Luckey, founder of Anduril Industries, and Newt Gingrich, former Speaker of the US House of Representatives, as leaders of the research effort. Hegseth unveiled the plan during a State of the Force speech at Marine Corps Base Quantico in Virginia, saying the project would focus on finding, developing and fielding new weapons and systems to meet the forms of warfare the US military may face in the coming decades. Musk's SpaceX and Luckey's Anduril are both major contractors for the US Department of Defense. The project will be overseen by Emil Michael, a former Uber executive who currently serves as a senior technology official at the Pentagon. Hegseth did not disclose further details on the budget, timeline or structure of the project. Beyond Project Meridian, Hegseth also announced the establishment of an Autonomous Warfare Command to oversee the management and deployment of US drones and military robotic systems, and said he wants major US bases to be able to produce their own energy to preserve operational capability if the country's power grid is hit by a cyberattack. He also announced plans to set up an office for religious affairs for the military and to build partnerships with academic institutions to expand cadet training programs, with the first group of institutions taking part including Liberty University, Hillsdale College, Louisiana State University, Mississippi State University and Tuskegee University. At the same time, the US Department of Defense plans to build a new base inside the country for the first time in four decades, with state governments able to compete to host it; the base is expected to accommodate several thousand personnel, and each site could cover several hundred thousand acres. The plan comes as the Pentagon is considering reducing US troop levels in Europe, with Hegseth saying the military will add tens of thousands more personnel overall while shifting its focus back to homeland defense and the Western Hemisphere.

Codan sharply raised its first-half profit outlook on strong demand from drone manufacturers, sending its shares up 18.85% to a record high of A$61.79. The Australian communications technology company said it expects net profit after tax of at least A$160 million for the six months through December, more than double the A$71.2 million reported a year earlier and close to the A$175.2 million it generated for the full year ended June. The stronger outlook was driven by rising demand for electronic components used in unmanned drones deployed in conflicts including Russia-Ukraine and the Middle East, with Codan supplying a radio-frequency component that enables high-speed video and data transmission to about 50 drone manufacturers across the U.S. and Europe. Codan said demand from conflict regions was exceptionally strong, and its Minelab metal-detection business also started the financial year strongly, helped by sales of its Gold Monster 2000 and GPZ8000 detectors amid a higher gold price. The company said it could not provide a full-year profit forecast because demand from conflict regions is difficult to predict beyond roughly three months, and it is working to address potential supply-chain constraints amid the elevated demand.

Kratos Defense & Security Solutions and GE Aerospace announced the successful first ignition of the GEK800 Serial Number 1 turbofan engine on September 21, a milestone in a program the U.S. military has designated the F143-ZZ-100. The test, conducted at Kratos' X-58 facility, achieved a 100% success rate for the development phase and keeps the affordable, high-performance propulsion system on schedule for advanced cruise missiles and uncrewed aerial systems. For Kratos, the milestone supports a Government Solutions segment that posted $379.7 million in Q2 2026 revenue, up 22.0% organically, with Turbine Technologies up 43.3% organically, a consolidated book-to-bill ratio of 1.1x and $2.084 billion in backlog, as the company ramps full-year 2026 revenue guidance to $1.750–$1.810 billion. GE Aerospace's Defense & Propulsion Technologies segment reported $3.4 billion in Q2 2026 revenue, up 16%, and raised full-year DPT operating profit expectations to $1.6–$1.7 billion. Kratos also faces cash conversion pressure, with $11.0 million in Q2 2026 operating cash outflow and $18.9 million in negative free cash flow, while GE's DPT margins face ongoing pressure from investments and inflation.