Israel launched a surprise attack on Iran on June 12, triggering global market turmoil. The Israeli government described the assault as a "preemptive strike" against what it claimed was Iran’s advancing nuclear weapons program. Explosions were reported across Tehran following the attack.
Israel Braces for Retaliation
In response to the escalating tensions, Israel’s defense minister declared a state of emergency and said the country was preparing for possible retaliation from Iran. Meanwhile, U.S. Secretary of State Marco Rubio confirmed the United States was not involved in the strikes and cautioned Iran against targeting American assets or personnel.
Against this backdrop, below we highlight a few sector-based exchange-traded funds (ETFs) that could gain higher.
Sector ETFs in Focus
Energy – Energy Select Sector SPDR ETF XLE
The conflict immediately jolted commodity markets. Crude oil surged about 5% (at the time of writing), reflecting investor fears over supply disruptions from Iran, OPEC+’s third-largest producer. Energy ETFs like XLE should gain higher amid this kind of scenario.
Gold Mining – Themes Gold Miners ETF AUMI
Safe-haven demand also spiked, pushing gold up about 1%. Since mining stocks often act as a leveraged play of the underlying metal, AUMI should gain higher. The underlying Solactive Global Pure Gold Miners Index provides exposure to companies that are active in the gold mining industry and is denominated in U.S. dollars. Gold-mining margins are at a 50-year high, according to analysts, as quoted on Wall Street Journal.
Defense – iShares U.S. Aerospace & Defense ETF ITA
Investors may turn to defense ETFs during heightened Israel-Iran tensions as geopolitical conflicts often lead to increased military spending and defense readiness. Companies in these ETFs—such as those producing weapons, surveillance systems, or military technology—stand to benefit from rising demand. As a result, defense ETFs like ITA come across as a strategic hedge (read: Guide to Aerospace & Defense ETFs).
Cybersecurity – ETFMG Prime Cyber Security ETF HACK
Modern warfare includes cyber threats, increasing demand for digital security. During periods of heightened tension, governments and corporations may face elevated risks of cyberattacks targeting critical infrastructure, defense systems, financial institutions, and communication networks.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Energy Select Sector SPDR ETF (XLE): ETF Research Reports Amplify Cybersecurity ETF (HACK): ETF Research Reports iShares U.S. Aerospace & Defense ETF (ITA): ETF Research Reports Themes Gold Miners ETF (AUMI): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
