Shares of BAE Systems, Lockheed Martin surge as Middle East conflict deepens

United States (U.S.) and European defence stocks jumped on Monday following a military escalation in the Middle East over the weekend amid speculation of a prolonged conflict with Iran.

European defence companies were clear winners as German Hensoldt's stocks jumped by 3 percent and Britain’s BAE Systems climbed by 4 percent.

Other military equipment production giants also saw a surge in their value. Shares of Thales, Renk and Leonardo rose between 4 percent and 1 percent.

U.S. defence giants Lockheed Martin and Northrop Grumman also recorded gains with 3 percent and 4 percent, respectively.

Experts have warned that prolonged conflict will increase market uncertainty.

The Western defence industry maintained its gains despite reports of three American fighter jets crashing in Kuwait.

In a press release on Monday, March 02, 2026, United States Central Command (CENTCOM) announced the crashing of three U.S. F-15E Strike Eagles, flying in support of Operation Epic Fury, with friendly fire.

The CENTCOM statement read, “During active combat—that included attacks from Iranian aircraft, ballistic missiles, and drones — the U.S. Air Force fighter jets were mistakenly shot down by Kuwaiti air defenses.”

The pilots on all the crashed jets ejected safely, were recovered and are in stable condition.

The U.S. military has launched an investigation into the incident.