President Trump pulled the United States out of the “horrible, one-sided” Iran nuclear pact yesterday, a move that was met with widespread consternation and condemnation in Europe, where German, British, and French leaders have vowed to remain committed to the deal with or without the U.S. And for good reason; should the deal fall through completely, Iran has vowed to begin enriching uranium again within weeks of such a development, though Iran has also stated that it will remain in the nuclear deal without the U.S.
Trump’s decision to exit the landmark deal and impose sweeping sanctions on Iran and anyone doing business in the country has rippled across the stock market, positively and negatively affecting a number of sectors and individual companies. We’ll look at a few of the biggest winners and losers of the deal below.
Winners: Defense Stocks
Defense stocks like Lockheed Martin Corporation (NYSE:LMT) and Northrop Grumman Corporation (NYSE:NOC) are some of the prime beneficiaries of the heightened military tension and outright conflict that is likely to result from Trump’s move, with missile strikes reportedly being launched by Yemen rebels as well as Israel within hours of the U.S exiting the nuclear pact.
The development should help defense stocks rebound from a sharp and somewhat inexplicable correction that took place in late-April, despite strong earnings beats and outlooks from Lockheed Martin Corporation (NYSE:LMT), Northrop Grumman Corporation (NYSE:NOC), and General Dynamics Corporation (NYSE:GD).
Loser: Boeing Co (NYSE:BA)
Boeing Co (NYSE:BA) took a $20 billion hit to the chin from the Iran deal exit, as Treasury Secretary Steven Mnuchin announced that the aerospace giant’s license to sell $20 billion worth of jets to Iran had been revoked. Boeing signed a deal to supply 80 aircraft to Iran Air in December 2016 through the Joint Comprehensive Plan of Action, in addition to having a contract to supply 30 aircraft to Aseman Airlines. Boeing had not yet committed production slots for the Iran-bound jets according to CEO Dennis Muilenburg, so its 737 production will be unaffected by the lost contract. The same can’t be said about its future revenue however.
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On the next page we’ll look at several other winners and losers that will result from the Iran deal fallout.