If there is a military escalation or a direct attack by the US in Iran (or in the Middle East in general), three sectors tend to react most strongly: armaments (defense), energy (oil/gas) and safe havens (gold/precious metals).
1. defense industry (defense & aerospace)
This sector benefits directly from the expectation of government orders for ammunition, missile systems, drones and logistics. The focus here is on US companies, but European stocks also often move up.
ETF option (broad diversification):
iShares US Aerospace & Defense ETF (focus on US defense):
VanEck Defense UCITS ETF.
VanEck Defense ETF: WKN: A3D9M1 / ISIN: IE000YYE6WK5
2. energy sector (oil & gas)
Iraq is a major oil producer. A conflict in this region immediately fuels fears of supply shortages or blockades (e.g. Strait of Hormuz). The oil price (Brent/WTI) usually rises sharply, which increases the margins of the major oil companies (Big Oil).
Certificates on the oil price:
If you want to bet directly on the commodity price (Brent Crude Oil), you often use ETCs (Exchange Traded Commodities).
WisdomTree Brent Crude Oil: WKN: A1N49P/M/N / ISIN: JE00B78CGV99
3. safe havens (gold & dollar)
In times of military uncertainty, capital flees from risky investments (such as tech stocks) into so-called "safe havens".
Gold: Considered the number 1 crisis currency.
US dollar: Often appreciates as it is considered the most stable currency, which in turn burdens export-oriented US companies, but can benefit dollar holders.
Important risk warnings
"Sell the news": Markets often price in conflicts before the first shot is fired. As soon as the attack actually takes place, it can paradoxically happen that prices (e.g. oil, gold, silver)
prices (e.g. oil, gold, silver) fall because the uncertainty has disappeared ("sell on good news, buy on bad news" - or vice versa).
Overall market reaction: While armaments and oil rise, broad indices such as the DAX or the S&P 500 often fall initially, as transportation costs rise (bad for airlines such as Lufthansa) and consumer sentiment falls.
Political intervention: If the oil price is too high, the USA often intervenes in strategic oil reserves, which can quickly reduce the price pressure on energy stocks.
