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Defense Stocks Rally Amid Russia-Ukraine War

Industry: Aerospace and Defense
Current: Company Performance

The Russia-Ukraine war has led to countries increasing their defense spending amid the uncertainty in the region
Consequently, the stocks of defense companies have registered a significant increase
Defense companies have booked orders from Europe since the onset of war

Defense Stocks Rally Amid Russia-Ukraine War

Ever since the Russia-Ukraine war broke out, defense companies have reported an increase in stock prices. The Russia-Ukraine war has led to complicated geopolitical consequences in Europe, and the EU member countries fear that the conflict might engulf the entire region. As a result, the countries in Europe have increased their defense spending to fortify their military capabilities. The Russian invasion has rocked the global markets, and the aerospace and defense companies' stock prices increased due to the increase in defense spending. Several countries are planning to increase their defense budget, with countries such as Germany and Japan having already announced a rise in their defense budget. Germany's defense budget will now make up to 2% of its GDP from the earlier 1.5%, whereas Japan's defense expenditure will reach 1% of its GDP. The increase in spending would take time to materialize into orders for defense companies, but the defense stocks have gained considerably due to the US and its allies' supply of arms and ammunition to Ukraine.

Lockheed Martin

The company's stocks have risen nearly 12% over the past month. After the war broke out, the US defense firm Lockheed Martin received an order for 35 jets for their flagship F-35 Joint Strike Fighter from Germany. Lockheed's helicopters, Javelin missiles, and other products were sent to Ukraine by allied countries after the Russia-Ukraine war broke out. On March 22, 2022, Lockheed secured a $319 million order for 308 air-to-ground missiles from the US.

Raytheon Technologies

Raytheon reported a similar increase in stock price, which gained more than 13% over the past month. Raytheon manufactures Javelin missiles in partnership with Lockheed and indigenously manufactures Stinger missiles. Both the missiles have been in constant demand in Ukraine, and the company needs to supply these missiles to Ukraine soon to replenish the depleted inventories.

BAE Systems

The British defense firm BAE Systems reported the most significant jump in its stock price than its peers. It registered a more than 24% increase in its stock price over the past month. On March 22, 2022, the US awarded BAE Systems a $34.9 million contract to design and develop an Amphibious Combat Vehicle Recovery (ACV-R) type vehicle.

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