War has always had a profound impact on financial markets. While the initial reaction is often fear-driven, with investors fleeing to safe haven assets, certain sectors tend to benefit from the resulting geopolitical shifts, supply disruptions, and increased government spending. This article examines where investors may find opportunity during times of conflict, highlighting the less obvious areas as well as the more conventional sectors, and also reflects on learnings from the past.
The Immediate Impact on Markets
The outbreak of war typically triggers sharp volatility. Investors initially switch to a risk-off stance, moving capital into traditional safe havens assets such as gold, government bonds, currencies including the US dollar, Swiss franc and Japanese yen, and defensive equities. However, once the initial bouts of volatility subside, markets often begin to take notice of opportunities in sectors that are expected to benefit from increased defence budgets, risks to energy supply, shifts in supply chains, and so on.
Where Capital Flows First
Aerospace and Defence
The most straightforward investment theme during times of war is aerospace and defence. Companies in these sectors benefit directly as governments are forced to prioritise national security and rapidly expand military budgets. Conflict typically accelerates investment in defence and unlocks emergency funding, leading to a sharp increase in orders for everything from weapons systems and aircraft to naval vessels, communication infrastructure, and support services.
Firms such as Rolls-Royce, BAE Systems, Babcock, and Lockheed Martin are often at the forefront of this surge, as they are already embedded in domestic defence ecosystems and have the scale and experience to deliver on complex, high-value contracts. Demand extends beyond traditional hardware, with governments also investing heavily in upgrading surveillance capabilities, strengthening cybersecurity, and ensuring logistical readiness, all areas which these companies are well-positioned to serve. In sustained or escalating conflicts, this uptick in spending often translates into multi-year revenue growth and increased order backlogs, making the sector one of the most reliable beneficiaries in a wartime environment.
Energy and Oil
Wars, particularly in oil-producing regions such as the Middle East, almost always disrupt or threaten to disrupt global energy supply chains. This pushes up oil prices, boosting revenues for energy giants like Shell, BP and ExxonMobil, as well as oilfield service providers such as Halliburton and Schlumberger.
This effect was observed during the recent conflict between Israel and Iran. The prospect of further escalation, particularly due to the involved of the US, caused a sharp spike in the price of oil as traders mulled the likelihood of Iran closing the Strait of Hormuz, through which roughly 20% of global oil supply passes through. If such a supply shock were to materialise, the price of oil would adjust accordingly, boosting revenues for companies within the energy sector.
Precious Metals
Gold remains the benchmark safe-haven asset during conflict and uncertainty more broadly. In times of instability, investors consistently turn to gold as a store of value and a hedge against volatility. This behaviour is rooted in gold’s unique qualities. It is a physical asset with low counterparty risk, universally recognised and valued, and historically resistant to currency debasement due to its finite supply. During war, confidence in risk assets can fall, and inflation often rises due to increased government spending and supply chain disruption, gold offers protection.
Gold mining companies such as Fresnillo, Endeavour Mining and Newmont Mining often outperform in these periods as investor demand for gold rises. These stocks also tend to benefit from operational leverage, meaning their profitability can increase disproportionately with the price of gold. Meanwhile, ETFs like the SPDR Gold Trust (GLD) offer a more direct and liquid way to gain exposure to bullion, making them a popular choice during episodes of market stress. A recent example of gold’s resilience came during the Russia–Ukraine war, when prices surged as investors sought safety amid rising energy prices, inflation, and broader geopolitical risk.
Lessons from History
Despite initial panic, US markets surged during the second half of World War II, driven by a boom in manufacturing and a sweeping mobilisation of the economy. As the US transitioned into a wartime machine, industrial giants like General Motors and Boeing experienced rapid growth, pivoting to meet soaring demand for vehicles, aircraft, and military equipment. This industrial surge not only fuelled employment and wage growth at home but also laid the groundwork for long-term corporate expansion.
Additionally, consumer staples such as Coca-Cola and Procter & Gamble remained resilient, benefiting from stable demand and their ability to maintain operations during wartime constraints. Coca-Cola was deemed essential to troop morale and was given special access to sugar and materials to ensure its global availability to American soldiers, helping the brand expand internationally.
The war economy also unleashed unprecedented levels of fiscal stimulus. Massive federal contracts flooded key sectors with capital, boosting corporate revenues and profits. This combination of public investment, industrial output, and steady consumer demand contributed to a surprisingly robust equity market performance, especially from 1942 onwards. By the end of the war, the foundations had been laid for the post-war economic boom that dominated the decades that followed.
Under-the-Radar Sectors
Cybersecurity
Modern warfare increasingly includes digital attacks, making cyberspace a key battleground. State-sponsored hacking, ransomware campaigns, and attacks on critical infrastructure, such as energy grids, communication networks, and financial systems, have become common tools of disruption and intimidation. The total economic impact of cyberattacks is projected to be $16 trillion by 2030, illustrating the growing size of the threat and the importance of safeguarding against it. As these threats escalate in frequency and sophistication, governments and corporations are being forced to invest heavily in cyber resilience.
This has led to growing demand for firms like CrowdStrike, Fortinet, and Palo Alto Networks, which provide advanced threat detection, real-time monitoring, and robust digital defence infrastructure. These companies play a vital role in safeguarding sensitive data, protecting government systems, and securing commercial operations against espionage, sabotage, and data theft. With geopolitical tensions rising and cyber warfare now recognised as a central element of modern conflict, cybersecurity has become a strategic priority. As a result, the space is seen by investors as a critical part of any defence-oriented portfolio, with strong long-term growth prospects tied to both national security and global digitalisation.
Shipping and Logistics
With global trade routes disrupted, logistics companies capable of adapting quickly, like Maersk and FedEx, can become strategically important. Wars and geopolitical tensions often lead to port closures, airspace restrictions, and the redirection of shipping lanes, placing immense pressure on global supply chains. In such environments, companies with flexible infrastructure, diversified networks, and strong operational expertise are best positioned to respond.
Firms like Maersk, with their integrated shipping and port operations, can reroute cargo, adjust schedules, and manage congestion more effectively than smaller or less diversified players. Similarly, FedEx’s global reach and multi-modal transport capabilities enable it to maintain service reliability even under disrupted conditions.
These companies also tend to benefit from rising freight rates and elevated demand for secure and efficient transport during times of uncertainty. As supply chain resilience becomes a greater, leading logistics providers stand to gain both strategically and financially from their ability to maintain the flow of goods when global systems are under strain.
Agriculture and Fertilisers
Disruption to global trade and food exports often drives up agricultural commodity prices, as conflict interferes with supply chains, shipping routes, and crop production in key exporting regions. This dynamic was clearly demonstrated during the Russia–Ukraine war, which began in early 2022. Ukraine, often referred to as the “breadbasket of Europe,” is a major global exporter of wheat, corn, and sunflower oil. The outbreak of war severely constrained exports from the region, with port closures on the Black Sea and damaged infrastructure halting shipments. At the same time, Western sanctions on Russi, another major exporter of wheat and fertilisers, further tightened supply.
The result was a sharp spike in global food prices, with wheat prices hitting their highest levels in over a decade. In response, countries around the world rushed to secure alternative sources of agricultural commodities, driving increased demand for North American producers. Fertiliser companies such as Nutrien and Mosaic benefited not only from rising crop prices, which incentivised higher planting activity, but also from supply disruptions in key inputs like potash and natural gas, areas in which Russia had played a dominant role. Meanwhile, agricultural giants like Archer Daniels Midland saw rising revenues as they stepped in to fill the global supply gap, leveraging their extensive logistics networks and storage capacity.
The war underscored just how vulnerable global food systems are to geopolitical shocks, and how quickly market dynamics can shift in favour of companies with scale, resilience, and global reach. As food security becomes an increasingly strategic issue, the agricultural sector has become an important investment theme in times of geopolitical stress.
Telecoms and Secure Communication
Reliable communication becomes critical during war, supporting both military operations and essential civilian infrastructure. Traditional networks are often disrupted, increasing demand for secure, resilient systems. Telecom providers and satellite communication firms like Starlink and Inmarsat see rising demand from governments, armed forces, and emergency services, who rely on real-time, uninterrupted connectivity.
Starlink, for example, has been deployed in conflict zones to restore internet access where terrestrial networks have failed. Companies offering satellite-based or encrypted communication solutions become strategically important, as secure information flow is vital for both coordination and national security.
How to Position Your Portfolio
Rather than making drastic shifts to portfolios during conflict, investors can lean into the sectors outlined above that are likely to benefit from conflict while maintaining diversification. ETFs can also offer a useful way to gain exposure across these sectors without betting too heavily on individual names. It is also important to assess the likely duration and scope of a conflict, as short-term volatility may present long-term opportunities.
War disrupts markets but can also reshape them. Historical precedent shows that certain sectors consistently outperform due to heightened demand, fiscal stimulus, or resource scarcity. Investors who understand these patterns can build a resilient portfolio that not only protects capital but may even thrive during uncertain times.
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DISCLAIMER This article is for information purposes only and no part of it or its contents are deemed to be nor should be taken as advice. It does not constitute recommendations to buy or sell any securities mentioned. Past performance of investments is no guide to future returns and you may get back less than you invested. Capital at Risk.