Once Soared on Iran War, Now Defence Stocks Lose Steam

Jakarta, CNBC Indonesia - Share performance of various global defence and aerospace companies has shown mixed movements over the past three months since the US-Iran war erupted in late February 2026. According to data recap from mid-February to 22 May 2026, most major defence firms have recorded subdued performance. Multinational giants based in the United States, such as Northrop Grumman, Lockheed Martin, and Boeing, have seen share price declines ranging from -9% to over -20%. A similar correction has been observed in Chinese firm Shenyang Xingyang Aero. Conversely, some firms such as Elbit Systems and Kongsberg Gruppen have remained in the green. Market Dynamics and Conflict Sentiment Analysis The above share price movements present an empirical conclusion that contradicts conventional market wisdom. There is a common assumption that defence company shares automatically surge during wars or geopolitical tensions. However, short-term performance data reveals the opposite. Contrary to expectations, defence stocks began declining on 2 March 2026 when the war commenced, despite initial soaring. The correction in major defence contractors’ share prices demonstrates that stock valuations are not solely driven by war sentiment. Investors continue to assess rational factors beyond conflict-related hype. Technical variables such as government military contract execution, global raw material supply chain disruptions, potential overvaluation from previous periods, and operational profit margins remain key determinants of share price direction. Thus, the assumption that the defence sector inevitably profits and surges during wartime conflicts is inconsistent with current market realities.