War Stocks Rise After Paris Attacks
Stocks were mixed in international trading. Asia had a down day, with both Japan and Hong Kong losing money. The Nikkei in Japan was down 203 points, while Hong Kong’s Hang Seng lost 385. In Australia, the ASX gained 39 points. Across Europe, stocks were mostly up.
War Stocks Rise After Paris AttacksShare of Lockheed Martin (LMT) and other defense contractors were on the rise Monday, following the devastating terrorist attacks in Paris. Raytheon (RTN) was also up 4% after the attacks, the attacks fueling its second-biggest gain in three years. Northrop Grumman (NOC) were also up more than 4% on the day.
All of these companies make the weapons and vehicles used in the fight against the war on terror. After the Paris attacks, each stock jumped up on higher than average demand. It was a mix between companies that made aircraft, land vehicles, and missiles and bombs. One thing they all had in common was that each stock is a vital part of the war effort.
We haven’t seen a jump like this since the terrorist attacks in London took place. After those attacks, each stock also jumped about 4%. It seems to be a pattern that, after every terrorist attack, defense stocks bounce in order to prepare for the inevitable counter-attack.
One of the biggest rises in defense stocks took place after the invasion of Iraq. During that time, Lockheed added more than 6% to its total value. This latest war on ISIS is also good for the market, if nothing else. Wars have been known to jumpstart the economy and add value to defense contractors.
The most famous example, World War II, lifted the US economy out of depression. Although nobody likes the fact that these wars need to be fought, the markets do surprisingly well in wartime. The latest attacks have some analysts especially bullish about the future of defense stocks.
Published on Nov 16, 2015By Aaron Phillips