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Aerospace and Defense ETFs Soar Amid Rising North Korea Tensions

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Defense stocks have been rising with escalation of tensions between the US and North Korea, while the broader stock rally has stalled. Raytheon , Lockheed Martin (LMT) and Northrop Grumman (NOC) hit record highs after President warned North Korea against making any more threats to the US.

Trump said North Korea faces ‘fire and fury like the world has never seen before” and the rogue nation responded by threatening to launch a missile strike on Guam.

The sentiment for Aerospace & Defense stocks improves with rising geopolitical tensions. They surged after US missile strikes on Syria.  And, that is one of main reasons why these stocks performed well in the last few years, despite defense budget cuts in the US and Europe.

Many developing countries including India, UAE, Saudi Arabia and Brazil have increased their defense spending over the past few years. Of late, Japan and South Korea have also boosted their defense spending in response to increased military spending by China. Trump’s budget proposals call for a boost in US defense spending, which would be positive for these stocks.

Most aerospace & defense companies reported excellent earnings for Q2 and have seen continued positive momentum in earnings estimates. Aerospace & Defense ETFs have significantly outperformed the broader market this year.

To learn more about top ranked Aerospace & Defense ETFs--the iShares U.S. Aerospace & Defense ETF (ITA), the SPDR S&P Aerospace & Defense ETF (XAR) and thePowerShares Aerospace & Defense Portfolio (PPA), please watch the short video above.

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