Hedge funds including BlackRock and Citadel are scrambling to cover their short positions on defence stocks, as Russia's surprise invasion of Ukraine sent those shares soaring.

Breakout Point, a data analytics firm, found that BlackRock held a short position of about 0.6% of shares of British defence giant BAE Systems — one of the main contractors of the F-35 fighter — as of 27 January. The firm then reduced its short position to 0.39% on 28 February.