US-Iran Tension Soars After Airstrike, Defense Stocks Jump
Zacks Investment Research | Jan 05, 2020 08:28PM ET
U.S. defense stocks started 2020 on a strong note, following escalated cross-border tensions between the United States and Iran over the weekend. The situation between these two nations, which have been at loggerheads for long, worsened after an early-hour U.S. airstrike at Baghdad airport killed Iran’s top general Qasem Soleimani on Jan 3.
The latest strike has raised risk of military escalation between the United States and Iran, thanks to President Trump’s repeated remarks of threatening to hit Tehran, if needed. On the other hand, Iran has vowed to take “severe revenge”.
Will Iran Retaliate?
General Soleimani’s death has significantly increased the possibility of a war between the United States and its adversaries in the Middle East, particularly Iran and Iraq. The nuclear deal negotiated by the international community with Iran, after years of hurdles, is the first victim of the crisis. Iran’s government announced on Jan 5 that the country will no longer observe limitations on uranium enrichment, stockpiles of enriched uranium or nuclear research and development.
The Iranian government has been harboring a lot of anguish against America, following the latter’s repetitive attempts to establish its influence on Iran’s economy through the nuclear deal signing along with last June’s sanction that prevented Iran’s top military officials from accessing U.S. financial instruments.
The killing of Soleimani seems to have served as the last nail in the coffin. Ayatollah Khamenei, another Iranian leader, has vowed that the nation will now take a direct military action against the United States. Adding to the woes of the geo-political situation in the Middle East, Iraq is also ready to make a move, having lost one of its commanders in the same airstrike.
In retaliation, Iraq’s parliament has voted to expel U.S. troops, which may consolidate Iran’s influence in Baghdad.
It is evident from the above discussion that the cross-border situation between the United States and the Middle East is quite delicate right now and the possibility of Iran and Iraq militants separately attacking U.S. troops, if not jointly, is high.
Defense Stocks Gain
Per a BBC Zacks Investment Research
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