Aerospace and defense stocks usually perform well during geopolitical disturbances. The nations aiding Ukraine in the fight against Russia have been increasing their defense budgets to stay protected against the consequences of the war. President Joe Biden has committed $3.4 billion in aid to support Ukraine. Moreover, many European countries have pledged to increase defense spending since the beginning of the Russia-Ukraine war. These increased budgets should benefit the aerospace and defense sector.
While fighter aircraft and weapons-makers witnessed a decline in sales in the first quarter due to the sanctions on their top customer ─ Russia, the safe-haven appeal of the sector to investors amid the ongoing geopolitical unrest has led to many stocks in this space outperforming the border market.
