In response to North Korea’s latest saber rattling, aerospace and defense sector-related exchange traded funds climbed, reacting to the latest missile launch fired towards Northern Japan.
On Monday, the iShares U.S. Aerospace & Defense ETF (NYSEArca: ITA), PowerShares Aerospace & Defense Portfolio (NYSEArca: PPA) and SPDR S&P Aerospace & Defense ETF (NYSEArca: XAR) all increased 1.2%.
Defense stocks strengthened following North Korea’s latest missile launch across Japanese space. In response, Japanese Prime Minister Shinzo Abe called for stepping up pressure on North Korea as a necessary step, CBSNews reports
The White House echoed Abe’s calls for increasing the pressure on the recluse nation, saying “President Trump and Prime Minister Abe committed to increasing pressure on North Korea, and doing their utmost to convince the international community to do the same.”
Meanwhile, President Donald Trump stated “all options are on the table” in response to North Korea’s ballistic missile that escalated international tensions, CNBC reports.
“The world has received North Korea’s latest message loud and clear: this regime has signaled its contempt for its neighbors, for all members of the United Nations, and for minimum standards of acceptable international behavior,” Trump said in a statement.
Trump has previously ignited the fire under the aerospace and defense sector after stating that the U.S. was ready to respond with “fire and fury” in the wake of reports that Pyongyang successfully miniaturized a nuclear weapon to fit in one of its missiles.
“Obviously this creates opportunity for defense contractors, especially those with some kind of missile defense” Ivan Feinseth, chief investment officer for Tigress Financial Partners, told Investors Business Daily, adding that it was also good for companies that provide satellites tracking and monitoring.
For instance, Lockheed Martin (NYSE: LMT) has a Terminal High Altitude Area Defense system deployed in South Korea. Raytheon (NYSE: RTN) makes a Patriot system while Lockheed produces the Patriot Advanced Capability-3 interceptor missiles. Boeing (NYSE: BA) manages the Ground-Based Midcourse Defense system in Alaska to protect the U.S.
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