US defence stocks see no Iran war lift after early surge
US defence stocks have declined despite the ongoing Iran war, indicating that the typical 'buy-on-conflict' trade had largely peaked in anticipation of tougher action by President Donald Trump. The NYSE Arca Defence index fell nearly 8 percent in March, compared with the broader S&P 500's 5 percent drop.
US defence stocks have declined as the Iran war continues. The NYSE Arca Defence index fell 8 percent in March. This decline indicates that investors had already factored in the conflict premium. The defence sector had rallied earlier in the year, but strategists say investors are now unwinding positions. The US defence budget for 2027 is proposed at $1.5 trillion, but uncertainty remains over its passage. The defence index has surged over 150 percent between 2020 and 2025, leaving the sector at historically elevated valuations.
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