• Defense stocks spike after airstrike against Iranian commander - The Washington Post
    https://www.washingtonpost.com/business/2020/01/03/defense-stocks-spike-following-airstrike-against-iranian-commander

    Major weapons builders saw their stock prices jump Friday after a U.S. airstrike killed a top Iranian military official near the Baghdad airport, drawing immediate threats of retaliation.

    With thousands of U.S. troops already headed to the region to bolster security there, defense analysts now predict the long-running U.S. military presence in Iraq ― and the billions of taxpayer dollars spent there every year on munitions and troop support ― is unlikely to be drawn down.

    U.S. defense contractors, which have benefited financially from the long-running wars in Iraq and Afghanistan, are among Wall Street’s few beneficiaries of heightened tensions in the Middle East, analysts said. Stock prices of most major defense manufacturers closed several points higher Friday even as climbing oil prices appeared to hurt major stock indexes .

    [...]

    The Pentagon has already announced that it is sending 3,500 additional troops to the Middle East and warned Americans to leave Iraq “immediately.”

    Stock analysts tracking the defense market said the escalated tensions could create more support for escalated levels of defense spending. The U.S. defense budget increased by about 16 percent in the first few years of Trump’s presidency before leveling off.

    [...]

    He said the event makes a further troop drawdown in the Middle East unlikely, as Iran and other “antagonists” pose a greater threat to U.S. installations across the region. The Defense Department’s spending from an account called Overseas Contingency Operations, which is used to fund active military operations, will probably remain at its current high as a result, he said.

    Jefferies Investment Bank analyst Sheila Kahyaoglu wrote in a note to investors that the threat of escalated conflict in the Middle East “points to the broad threat profile that supports elevated levels of spending.” She wrote that Lockheed Martin, Raytheon and General Dynamics could be the biggest beneficiaries because of their international #business.

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