© Reuters.
Investing.com — U.S. defense stocks jumped in premarket U.S. trading on Monday as traders gauged the geopolitical risk of the intensifying violence between Israel and Hamas.
Shares in Lockheed Martin (NYSE:), Northrop Grumman (NYSE:) and RTX (NYSE:), formerly known as Raytheon, were all higher ahead of the opening bell on Wall Street. Meanwhile, Italy’s Leonardo (BIT:), BAE Systems (LON:) in the U.K. and Dassault Aviation (EPA:) in France climbed in midday dealmaking in Europe.
Over the weekend, members of the Islamist group Hamas attacked several Israeli towns, killing hundreds of Israelis and abducting dozens more. In response, Israel declared war on Hamas and pounded targets in Gaza with air strikes that resulted in numerous casualties.
In a note to clients, analysts at Wells Fargo predicted that while defence stocks were likely to outperform in the wake of the sudden escalation of the conflict, the fighting is not expected to result in a long-term change in the American defense spending outlook.
“This could change if the scope of the conflict widens,” the Wells Fargo analysts noted.
At the moment, Washington currently supplies $3.8 billion in aid to Israel per year and has said it plans to provide additional support.
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