Shares of airlines, cruise operators and hoteliers fell on Monday as investors reacted to conflict in
Energy and defence stocks jumped.
and American Airlines Group Inc. slid about four per cent in premarket trading, while Carnival Corp. and
declined about six per cent.
and Lockheed Martin Corp. were among the most notable gainers.
Traders are grappling with the risk that the fighting disrupts energy supplies and stokes inflation. Brent crude oil surged as much as 13 per cent before paring gains.
“The situation remains highly fluid, and it is uncertain how long this conflict will last, with potential risks to energy supplies, sea freight in the straight of Hormuz, air travel and tourism,” wrote Barclays Plc strategist Emmanuel Cau.
Cau sees the ‘quality’ theme as a place to hide following recent declines, with energy and commodity stocks also preferred. The bullish case for defense shares has been reinforced, he added.
futures fell as much as 1.8 per cent, mirroring declines in Asia and Europe.
Here’s a breakdown of the sectors in focus:
Energy
Major energy companies saw strong gains across the globe. Exxon, Chevron and SLB Ltd. rallied in U.S. premarket trading, Norway’s Equinor rose as much as 10 per cent, and Spain’s Repsol gained as much as 8.2 per cent. Australia’s Woodside Energy Group Ltd. and Hong Kong-listed PetroChina rose 6.8 per cent and 4.1 per cent, respectively.
“It’s just a matter of what impact will Iran’s response have on the global oil supply — at least temporarily, and then maybe longer term,” said Rob Thummel, a portfolio manager at Tortoise Capital. Any spike in prices could prove short-lived if supplies aren’t severely disrupted, he said. In a less likely scenario, a prolonged closing of the Strait of Hormuz could push prices above US$100 per barrel, he added.
Iran has said it doesn’t intend to shut the waterway, which accounts for some 20 per cent of global oil flows, but there are signs that tanker traffic through the chokepoint is halting.
Oil tankers are are also poised to benefit, Thummel said. On the flip side, higher crude prices typically squeeze the margins of refiners such as Marathon Petroleum Corp. and Valero Energy Corp.
Defence
Defence stocks have rallied over the past year as global tensions intensified, and the latest Middle East conflict is giving investors another reason to pile in.
Key U.S. contractors such as L
and Northrop Grumman Corp. rallied in premarket trading, while drone manufacturer AeroVironment Inc. jumped 12 per cent and Kratos Defense & Security Solutions Inc. climbed 9.1 per cent.
In Europe, BAE rose as much as 8.3 per cent and Rheinmetall AG gained six per cent. Japan’s Hosoya Pyro-Engineering Co. surged 9.7 per cent, while China’s J-35 stealth fighter maker Avic Shenyang Aircraft Company Ltd. and drone-maker AVIC Chengdu UAS Co. climbed 4.7 per cent and 20 per cent, respectively.
“The market will take this as broadly positive for European defence stocks,” MWB Research analyst Jens-Peter Rieck said. Still, “any move is likely driven more by sentiment than changes to earnings estimates,” he said.
has already pushed European and Asian allies to spend more on security and proposed an increase of some $500 billion in U.S. military outlays.
The desire for more military funding may now spread to the Middle East, according to Jefferies analyst Sheila Kahyaoglu. U.S. contractors would capture much of that new business from the region, which already accounts for a significant portion of their foreign military sales, she said.
Precious metals
Investors typically turn to safe-haven assets like gold and silver during geopolitical uncertainty, a move that tends to lift mining stocks. Precious metal prices —already on a searing rally over the past year — started marching higher in the weeks before the Iran conflict.
In North America, shares in Agnico Eagle Mines Ltd.,
and Newmont Corp. edged higher in premarket trading. The Canadian equity benchmark—the
—may outperform Monday given its heavy exposure to mining and energy sectors, which make up about 38 per cent of the gauge.
London-listed Hochschild Mining Plc climbed as much as 6.1 per cent, Australia’s Genesis Minerals Ltd. gained 8.5 per cent, and Hong Kong-listed Chifeng Jilong Gold Mining Co. surged 12 per cent.
Travel and transportation
Higher oil prices can raise cruise line operators’ and airlines’ fuel costs, while escalating tensions risk disrupting global travel demand and operations. Carriers across the Persian Gulf have extended flight suspensions, which could disrupt the finely tuned choreography of global aircraft movements.
American Airlines, Delta Air Lines Inc. and United Airlines Holdings Inc. fell more than five per cent in premarket trading on Monday, while in Europe, IAG plunged as much as 13 per cent — the steepest drop since November 2021. Australia’s Qantas Airways Ltd. slumped 5.4 per cent, Japan Airlines Co. dropped 5.9 per cent in Tokyo and Singapore Airlines Ltd. fell 5.3 per cent.
Leading cruise operators lower, Carnival slid along with peers Royal Caribbean Cruises Ltd. and Norwegian Cruise Line Holdings Ltd.
“The immediate impact will be on airline and travel stocks as we see news of airspace closures over the Middle East and potentially flight cancellations en route to Europe,” said Francis Tan, chief Asia strategist at CA Indosuez Wealth Asset Management.
Each five per cent change in Jefferies’ estimate for fuel prices in 2026 translates to a five per cent to 10 per cent impact on Delta’s and United Airlines Holdings Inc.’s earnings per share. For American, it represents a 35 per cent impact in either direction, according to analyst Kahyaoglu. Still, the North American carriers have “minimal” direct exposure to Middle East travel, she added, with Air Canada the highest at 1.1 per cent of its capacity.
Hotel operators could be hurt by travel disruptions and reduced demand. InterContinental Hotels Group Plc operates more than 100 hotels across the region, and its shares fell as much as 6.2 per cent in London. French peer Accor SA plunged 11per cent.
The closing of Middle East airspace also threatens the margins of freight carriers such as FedEx Corp., United Parcel Service Inc. and DHL Group, as longer transit times would drive up fuel costs, according to Bloomberg Intelligence’s Lee Klaskow.
On the other hand, transport snags through the Red Sea and Suez Canal allow container shippers such as AP Moller-Maersk A/S to charge more for their services. Maersk shares rose as much as 7.6 per cent in Copenhagen.
Luxury goods
For luxury stocks, any event that disrupts travel is never helpful, especially to and from the world’s wealthiest places. According to RBC Capital Markets, the sector may be weighed on by the conflict’s near-term impact on consumer confidence, wealth creation and traveler flows.
“We expect luxury stocks to be under pressure given luxury demand typically requires ‘feel good’ backdrop,” wrote RBC’s Piral Dadhania, in a note.
A UBS Group AG basket of European luxury-goods stocks fell as much as 4.3 per cent on Monday, extending its year-to-date decline to 10 per cent. Switzerland’s Richemont and Swatch Group AG, which are among the luxury firms most exposed to the Middle East, led declines.
With assistance from Levin Stamm, Abhishek Vishnoi, Winnie Hsu, Neil Campling, Monique Mulima, Peyton Forte, Andrea Felsted, Sangmi Cha, Arvelisse Bonilla Ramos, Alexandra Semenova, Natalia Kniazhevich, Isolde MacDonogh and Julien Ponthus