Defence shares soar amid Israel-Hamas conflict
Stocks
In a surprising turn of events on Wall Street, stocks managed to rebound despite initial concerns surrounding the deadly conflict between Hamas and Israel.
As per AFP, on Monday, stocks closed higher, bouncing back from a slump.
Resilient markets
As the world faces geopolitical uncertainties, initially, following a weekend attack by Palestinian militant group Hamas on Israel, US stocks had initially experienced a dip.
Even as fears of escalating tensions lingered, markets eventually shrugged off the pressure.
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Oil prices, however, surged due to concerns about growing unrest in the oil-rich Middle East.
The Dow Jones Industrial Average registered a 0.6 per cent increase, reaching 33,604.65 points.
Similarly, the broad-based S&P 500 Index climbed by 0.6 per cent to 4,335.66 points, and the Nasdaq Composite Index showed a 0.4 per cent advance, closing at 13,484.24 points.
Outside the US, businesses with ties to Israel, such as chipmakers and software providers, faced pressure as a result of the conflict.
Defence shares jump
Interestingly, shares of prominent defence and oil companies experienced significant gains during this tumultuous period.
Lockheed Martin, for instance, closed nearly 9 per cent higher, reflecting investors' focus on security-related industries. Northrop Grumman Corp rose by 11.4 per cent and Exxon Mobil picked up 3.4 per cent.
Talking to AFP, CFRA Research chief investment strategist Sam Stovall said: "Historically, military shocks on their own have tended to be short-lived."
"Even though oil prices spiked by 4.3 percent on the first trading day after the attack, the US dollar weakened, and share prices rose, implying that traders think this military shock will also likely not trigger a new bear market," he added.
This unexpected surge in defence stocks appears to be linked to concerns about geopolitical risks.
Investors are grappling not only with elevated interest rates but also with signs of economic turbulence in China, reports Bloomberg.
Hamas' attack on Israel has once again redirected attention to the defence sector, wrote Truist Securities analyst Michael Ciarmoli in a note to clients.
Ciarmoli noted that the shares had previously been underperforming due to uncertainties about the US military budget.
(With inputs from agencies)
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