Defense Stocks Rallies As Trump Warns Iran Conflict Could Drag On

Global defense stocks rose sharply Monday as military clashes between the US, Israel, and Iran fueled expectations of prolonged conflict, even as broader equity markets declined.

In Europe, shares of BAE Systems, Hensoldt, Thales, and Leonardo posted solid gains, while the Stoxx 600 fell more than 1%. US defense giants Lockheed Martin and Northrop Grumman climbed over 5% in premarket trading.

Global defense stocks jump as U.S., Iran exchange attacks https://t.co/E5MCQBqQCb

— CNBC (@CNBC) March 2, 2026

The rally followed US and Israeli strikes on Iran that killed Ali Khamenei, triggering Iranian retaliation that left three US service members dead. President Donald Trump warned the conflict could last up to four weeks.

Analysts said uncertainty over the duration of the war, rising oil prices, and higher defense spending expectations are driving investor interest, despite concerns over long term earnings sustainability.

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Polymarket Sees $529 Million In Bets On Iran Bombing

Prediction market platform Polymarket recorded $529 million in trades linked to the timing of US and Israeli military strikes on Iran, according to Bloomberg. An analysis by Bubblemaps SA found that six newly created accounts earned about $1 million by correctly betting the US would strike Iran by February 28.

tippinsightsTIPP Staff