Global defense stocks jump as U.S., Iran exchange attacks
Global defense stocks jumped early Monday as investors reacted to dramatic military tensions in the Middle East over the weekend.
The sector was a rare bright spot amid a broader market selloff triggered by fears of broader regional conflict.
Germany’s Hensoldt and England’s BAE Systems Both were among the top performers on the Stoxx 600, up more than 5%. Defense names Thales, colourAnd Leonardo rising between 3.1% and 4.5%, while wider Stoxx 600 index It fell 1.4 percent, reaching its lowest level in two weeks.
United States, US companies LockheedMartin And Northrop Grumman rose 7.7% and 5.2% in premarket trading. Futures transactions are followed S&P 500 It decreased by 1%.
Regional activities in the Asia-Pacific defense sector stagnated somewhat due to South Korean markets being closed on Monday. Japan’s defense heavyweights Mitsubishi Heavy Industries and IHI were up nearly 3%, while Singapore’s ST Engineering was up 2.8%.
These moves follow large-scale attacks launched by the United States and Israel against Iran over the weekend, killing Iran’s Supreme Leader Ayatollah Ali Khamenei and ending his 36-year rule. Three US soldiers were killed in Iranian retaliatory attacks against US bases in the Middle East.
The possibility of an increase also caused oil prices and shares of energy companies to increase.
“It’s a situation full of uncertainty that investors are grappling with right now,” said Patrick O’Donnell, Chief Investment Strategist at Omnis Investments.
“Stock markets are a little bit more uncertain about how long this is going to last, because the longer this is going to last, both in terms of growth and inflation,” O’Donnell told CNBC’s “Squawk Box Europe” on Monday.
“Actually, that’s a question… how long is this conflict going to last?”
The conflict with Iran entered its third day on Monday; US President Donald Trump warned that the US would suffer more casualties and said the conflict could last up to four weeks.
Defense stocks have increased in recent years as geopolitical tensions rise
Defense companies have already made big gains in the past few years amid rising geopolitical tensions, causing governments to increase defense spending.
— CNBC’s Lim Hui Jie and Lee Ying Shan contributed to this report
