Analysts explain: This is the reason behind the drop in defense stocks

Defense stocks in Tel Aviv are plummeting: the TA Defense index drops by 4.5% and completes a decline of nearly 14% in a month. Analysts explain that the declines stem from a change in sentiment following the Democrats' victory in the US, concerns about a slowdown in defense spending, and Trump's announcement on ending aid to Israel.

Defense stocks on the Tel Aviv Stock Exchange are sharply declining, led by Elbit Systems, N Next Vision, PCB, Imco, Ashtrom, and TSG. The TA Defense index drops by 4.5% and completes a decline of nearly 14% in the past month; since its peak in March 2026, the index has lost nearly half its value. Analyst Ilya Feiner from Leader Capital Markets explains that the declines reflect negative sentiment globally following the Democrats' victory in the US midterm elections and concerns about a reexamination of defense budgets, as well as uncertainty following Trump's announcement on ending security aid to Israel. Shai Aguzi, a partner at the hedge fund Long Road, adds that the possibility of geopolitical calm and the end of the war with Iran reduce the attractiveness of the stocks, and that the publication of Rheinmetall's reports, which lowered forecasts, indicates delays in revenue realization even amid strong demand.