Introduction
The recent escalation of tensions between Israel and Iran has led to a surge in demand for products manufactured by defense companies, boosting their stock prices on Wall Street. This article explores the impact of this conflict on major defense industry players and related petroleum companies.
Defense Industry Beneficiaries
The ongoing conflict has positively affected the stocks of several defense and cybersecurity companies, including those specializing in military hardware and services. Key players include:
Israeli Companies
- Elbit Systems: The largest Israeli defense electronics and security company, Elbit Systems saw its stock rise by 10.75% in the past week.
- Bet Shemesh Engines: Another Israeli company, Bet Shemesh Engines experienced a 7.20% increase in stock value.
Elbit Systems ranks among the top 50 global arms manufacturers and military service providers, according to the Stockholm International Peace Research Institute (SIPRI).
US-Based Companies
- Lockheed Martin: The largest US defense contractor reported a 2.86% decrease in stock value, trading at $467.06 per share.
- Raytheon Technologies (RTX): The second-largest defense company globally, Raytheon Technologies saw a 3.89% increase in stock value, currently trading at $146.6.
- Northrop Grumman: This aerospace and defense company’s stock rose 1.25% to $497.52.
- General Dynamics: Focused on aerospace and military sectors, General Dynamics experienced a 0.71% increase, trading at $279.29.
BAE Systems, a UK-based aeronautical commercial constructor, saw a 0.29% increase in stock value during the analyzed period.
Expert Analysis
Jacobo Rodríguez, a financial expert at Roga Capital, explained that stocks of defense companies tend to rise during military conflicts due to increased demand for their products and services.
“When a military conflict begins, we usually see an increase in stock prices for defense companies because there’s an expectation that demand for their products and services will rise.”
Rodríguez also noted that while the current Middle East conflict will likely drive stock prices up, these companies’ earnings and profitability may not be consistent.
Historical Stock Performance
Since the start of the conflict between Israel and Hamas on October 7, 2023, the stocks of major global arms manufacturers have shown significant gains:
- Elbit Systems (Israel): Stock price increased by 101%
- BAE Systems (UK): Stock price rose by 96.61%
- Raytheon Technologies (US): Stock price surged by 109.91%
- Northrop Grumman (US): Stock price gained 17.55%
- Lockheed Martin (US): Stock price increased by 16.55%
- General Dynamics (US): Stock price fell by 26.98%
Petroleum Industry Beneficiaries
The stocks of petroleum companies have also risen due to the recent increase in international oil prices. Key players include:
- Equinor (Norway): Stock price increased by 9.52%
- Petrobras (Brazil): Stock price rose by 7.84%
- Exxon Mobil (US): Stock price gained 4.91%
- PetroChina (China): Stock price improved by 4.38%
- ConocoPhillips: Stock price increased by 4.19%
International oil prices have risen by double-digits, with Brent crude at $73.35 per barrel and West Texas Intermediate at $71.17.
