Missiles continue to fly across the Middle East, boosting shares in defense contractors while causing declines in airline and cruise line stocks. JPMorgan analysts noted the conflict is creating clear leaders and laggards in the market. Investors are watching the Strait of Hormuz, which handles 20% of global oil supplies.
The ongoing conflict in the Middle East, involving Iran, has led to significant market movements. Defense stocks are surging due to a steady erosion of missile interceptor stockpiles, pushing shares of defense contractors higher. American LNG suppliers also saw gains, surging in Monday's trading, while tanker rates doubled in less than one day.
JPMorgan analysts wrote on Monday that the conflict is creating leaders and laggards. Semafor’s Tim McDonnell noted that fear and a lack of insurance are likely bigger impediments than a potential blockade of the 20-mile-wide Strait of Hormuz.
On the downside, cruise and airline shares are falling, as these companies are exposed to fluctuating fuel prices. Royal Caribbean, which hedges roughly 60% of its fuel costs, was less affected than Norwegian and Carnival. Airlines, which hedge more extensively, still face challenges from regional route suspensions, according to JPMorgan. Additionally, a popular Wall Street bet on emerging markets is experiencing losses.
