Is the market pricing in an attack on Iran?
In the last two days, more and more indications suggest a rise in security tensions between Israel and Iran, with global implications for the stock market:
American soldiers and government officials are being evacuated from bases in Iraq and other countries amid reports that nuclear talks are halted.
Trump publishes posts indicating doubt about the feasibility of an agreement with Iran, including hints of military action.
Indirect reports of unusual activity at the Pentagon (such as congestion at local pizzerias – a satirical but effective indicator for understanding security workload...)
And this morning – NBC reports that Israel has completed all preparations for an attack.
Market reaction:
Markets started yesterday's trading day with gains, but as signs of tension accumulated, we saw a trend reversal.
Investors shifted to a defensive stance – evidenced by the gains in gold and oil – a proven indicator that the market is watching the Middle East.
This is a clear indication of concern about escalation, which would harm oil supply from the Middle East and cause investors to seek refuge in solid assets.
Who might benefit from escalation?
The defense sector In the defense sector, stocks like Lockheed Martin ($LMT), Northrop Grumman ($NOC), Raytheon ($RTX), which produces, among other things, Tamir missiles for Iron Dome, General Dynamics ($GD), Palantir ($PLTR), Kratos Defense ($KTOS).
All of these could benefit from increased demand during tense periods – especially concerning missile systems, satellites, and defense technologies.
Eyes on oil and energy In the energy sector, companies like ExxonMobil ($XOM), Chevron ($CVX), Schlumberger ($SLB), and Occidental Petroleum ($OXY) are expected to benefit from rising oil prices.
Especially if concerns arise about disruptions to oil supply from Iran, Saudi Arabia, or the entire Persian Gulf.
The precious metals sector is back in focus – gold is rising, and funds like $GLD or stocks like Newmont ($NEM) and Agnico Eagle ($AEM) stand out in performance in a volatile market.
Oil and gold are rising, the defense sector is awakening, and the technology and consumer sectors are absorbing pressure.
We are monitoring official confirmations of military actions...
(It is important to note that sometimes in negotiations, business tactics of 'flipping the table' are also required...)