Investors Reassess War Winners As Defence Stocks Retreat
European defence stocks have cooled as investors reassess the impact of the Iran conflict on the sector. Despite a strong rally since the Russian invasion of Ukraine in 2022, the MSCI Europe Aerospace and Defence Index dropped 9.2% in March, its biggest monthly fall in five years. The decline is attributed to profit-taking, stretched valuations, and growing uncertainty over the future of warfare, with low-cost drones raising questions about the demand for legacy defence systems. According to Reuters, analysts remain broadly positive on the sector’s long-term outlook, driven by government spending commitments and selective buying on weakness.