President Donald Trump Boosts Aerospace & Defense ETFs
News of an arms deal between the United States of America and some Gulf states lifts Aerospace stocks and exchange-traded funds.
The iShares U.S. Aerospace & Defense ETF, SPDR S&P Aerospace & Defense ETF, and the PowerShares Aerospace & Defense Portfolio have been some of the most stable and robust “Trump trades” as they ascend to record highs.
The currently renewed airline pricing power affirmed by higher ticket prices, new aircraft program launches, ongoing demand for aircraft models and technology, and increased airline profitability are other potential catalysts for aerospace ETFs. Aerospace and defense industrials perform exceptionally well when interest rates go up because rising rates can lead to immense economic growth.
“The United States and Saudi Arabia are expected to agree to $300 billion worth of business deals and potential investments over the course of U.S. President Donald Trump’s visit to Riyadh. This move projects to solidify the commercial relationship between the two big nations as the kingdom’s economy cracks open,” MarketWatch reports.
ITA is a cap-weighted ETF which indicates that it has larger weights to big-name defense stocks, including Dow components Boeing and United Technologies. XAR is an equal-weight ETF. PPA holds about 50 stocks “involved in the overall operations, development, manufacturing, and support of aerospace operations, U.S. defense, and homeland security,” says PowerShares.
Aerospace and defense stocks are, in fact, industrial leaders. They are important drivers of the sector’s performance over the last year since they are part of the broader industrial sector.
CNBC reports that “President Donald Trump signed a nearly $110 billion weapons deal with Saudi Arabia,” There is also an ongoing presumption that the deal will grow rampantly, calculated to be worth at least $350 billion over the next decade. CNBC adds that “Jet maker Boeing also penned a handful of deals with Saudi Arabia during U.S. President Trump’s weekend visit. This deal involved the sale of military and passenger aircraft. Its stock was up at an estimated 2 percent.”