Defensive Stocks Surge Amid Geopolitical Tensions: A Portfolio Boost?

In the last 20 days, defensive stocks, particularly those involved in military arsenals, have shown exceptional performance. As geopolitical tensions continue to rise, these stocks are proving to be solid investments, delivering substantial returns to those who have them in their portfolios.

The recent uptick in these stocks can be attributed to the ongoing geopolitical unrest around the globe. The conflict between Russia and Ukraine has particularly fueled this momentum. After Russia’s full-scale invasion of Ukraine in February 2022, Western countries took decisive actions, including the freezing of approximately $300 billion worth of Russian sovereign assets. The European Union (EU) has since been using the interest earned on these assets to support Ukraine in its defence efforts.

In June, EU governments agreed to allocate 1.4 billion euros ($1.5 billion) from the profits generated by these assets to purchase arms and provide additional support to Ukraine. Similarly, interest earned on Russian assets in the U.S. has also been directed towards bolstering Ukraine’s defences. This international support has further intensified the demand for military equipment and technologies, driving up the stock prices of companies in the defence sector.

Here’s a closer look at the performance of some key defensive stocks over the past 20 days:

• Lockheed Martin Corporation (LMT): This leading U.S. defence contractor, known for producing fighter jets and missile systems, has seen a remarkable 14.14% increase. Technical indicators suggest it is a strong buy.
• Raytheon Technologies Corporation (RTX): Specializing in defence and aerospace systems, including missile defence and radar systems, Raytheon is up 14.59% in the past 20 days, also marked as a strong buy.
• Northrop Grumman Corporation (NOC): A key supplier of military technology, including drones and cybersecurity solutions, Northrop Grumman has risen by 11.66%, with strong buy signals from technical indicators.
• General Dynamics Corporation (GD): Providing military vehicles, submarines, and other defence systems, General Dynamics is up 6.19%. It’s currently trading within support of $277.32 and a resistance of $301.13 and is considered a strong buy.
• Boeing Company (BA): Despite no change in the last 20 days, Boeing is up 9.58% in the last 10 days, with technical indicators suggesting it is also a strong buy.

The resilience and growth of these defensive stocks highlight the potential benefits of including them in your portfolio. While the ongoing geopolitical tensions are concerning, these stocks have shown they can provide stability and growth in uncertain times.

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