US defence stocks have suffered their longest losing streak in two decades, with the sector now close to entering bear-market territory despite continued global conflicts and expectations of higher military spending.
The iShares US Aerospace & Defense ETF has fallen 18.2% from its record close on August 14, marking its biggest monthly and quarterly declines since the COVID-19 market sell-off in 2020. The fund has also recorded seven consecutive weeks of losses, its longest such run since 2006.
The weakness has surprised investors because defence companies are generally expected to benefit from rising geopolitical tensions and increased government spending on security. However, uncertainty over US budget allocations has weighed on investor sentiment and contributed to the sector’s retreat.
Technical indicators now suggest the decline may be approaching a possible turning point. The ETF’s nine-week Relative Strength Index has dropped to 30.2, close to the level typically associated with an oversold market.
Analysts are watching the $209.31-$211.82 range as an important resistance zone. A sustained move above that level could open the way towards $231, while a further decline could expose the ETF to support around $195.71.
Leave a comment