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Major global defense and energy stocks edged higher on Monday despite a broader sell-off across markets, reacting to the Iran conflict that erupted over the weekend in the first trading session.
Investors moved into defense contractors on expectations that rising geopolitical tensions could increase military spending, while energy companies gained as concerns over potential supply disruptions pushed crude and natural gas prices sharply higher by double-digit gains.
Asian markets started the week on the back foot as rising military tensions and higher energy costs fueled worries about global inflation, with Japan’s Nikkei 225 down 1.4%, Hong Kong’s Hang Seng off 2.1%, and South Korea’s Kospi slipping 1%.
However, Japanese defense firms Mitsubishi Heavy Industries and IHI Corporation each climbed around 3%, while energy giant Inpex rose more than 6%. In China, shares of AVIC Shenyang Aircraft gained 5%.
In Europe, Germany’s Rheinmetall rose 5%, while France’s Thales and Italy’s Leonardo advanced around 4%. Among energy companies, France’s TotalEnergies and Italy’s Eni each added about 4%, even as the broader Stoxx 600 index fell 1.8%.
In the U.K., the FTSE 100 declined 1.5%, while BAE Systems climbed more than 6%. Oil majors BP and Shell gained around 3%.
Türkiye’s BIST 100 retreated 2%, even as defense firm Aselsan and oil refiner Tupras posted gains of about 4% each.
In the U.S., S&P 500 futures were down about 1%, while defense and energy stocks outperformed in premarket trading. Lockheed Martin and Northrop Grumman were both up more than 5% ahead of the open, while RTX and L3Harris climbed between 5% and 7%. General Dynamics also moved higher, gaining about 3%.
Energy names followed oil prices up. Exxon Mobil jumped nearly 6% in premarket trading, Chevron rose around 4%, and ConocoPhillips added more than 6%.
Oilfield service firms Halliburton and SLB gained roughly 5% each.
The iShares U.S. Aerospace & Defense ETF (ITA), which tracks major U.S. defense and aerospace companies, added 2.6%, while the iShares U.S. Energy ETF, which follows leading U.S. oil and gas firms, picked up 3.3%.
Ahead of the opening bell on Wall Street, U.S. Defense Secretary Pete Hegseth outlined the objectives of the military campaign against Iran at a Pentagon briefing, saying the operation was focused on eliminating specific threats rather than spiraling into a prolonged conflict.
He stressed that the mission aims to target Iran’s missile capabilities, naval assets, and other security infrastructure, describing the strikes as "surgical, overwhelming, and unapologetic" rather than an "endless war."
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