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US arms manufacturers see stock prices soar as tensions with Iran rise

Stock prices of Northrup Grumman, Raytheon and General Dynamics continued to rise after markets reopened on Monday
The killing of Soleimani has sparked worries of war between the US and Iran (AFP/File photo)

Major American weapons manufacturers have seen their stock prices soar since the US killed Iran's top general Qassem Soleimani, and since Washington announced that it was deploying nearly 3,000 extra troops to the Middle East.

The killing of Soleimani, Iran's most powerful military commander, has stoked fears of a conflict across the Middle East.

Oil prices increase after US killing of top Iranian general fuels war fears
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Iran has vowed "severe revenge" on those responsible for Soleimani's killing, with analysts also fearing retaliatory attacks on the region's energy infrastructure.

Oil prices climbed on Friday, hurting major stock indexes, but despite the increase, arms companies reported a lucrative two days of business. 

Northrup Grumman saw its stock price increase by 5.43 percent on Friday, and it continued to increase on Monday by an additional 0.24 percent when the markets reopened.

Raytheon's stock price increased by 1.48 percent on Friday and then by 0.21 percent on Monday. Meanwhile, General Dynamics' stock price rose 0.98 percent on Friday, followed by an increase of 0.55 on Monday.

In the United Kingdom, weapons manufacturer BAE Systems was the highest riser on the London Stock Exchange on Monday, and its stock price increased by 2.37 percent. 

Oil prices continue to rise

Oil prices have also surged since Thursday, the day before the Iranian general was killed in Baghdad. Brent crude, the leading global price benchmark for crude oil in the Atlantic basin, briefly rose 1.5 percent to reach a price of $70 a barrel on Monday, the highest price in three months.

West Texas Intermediate, another benchmark for crude oil, rose 1.2 percent on Monday to $63.79 a barrel, the highest price since April.

In a note to investors, Jefferies Investment Bank analyst Sheila Kahyaoglu said the threat of escalated conflict in the Middle East "points to the broad threat profile that supports elevated levels of spending".

She wrote that while the increased escalation of tensions between Iran and the US will not do much to change Washington's defence budget for 2020, which has increased 16 percent since 2017, now being at $738 billion.

Kahyaoglu added that Lockheed Martin, Raytheon and General Dynamics could be the biggest beneficiaries because of their international business.