Global Markets Sway as Investors Flee Tech and Flock to Defence Amid Rising Geopolitical Tensions

Global financial markets experienced heightened volatility as investors reacted to a combination of weakening technology stocks and a powerful surge in defence-sector shares, driven largely by escalating geopolitical tensions and shifting government policies.

Across major indices, technology companies—particularly large-cap firms tied to artificial intelligence and cloud computing—faced notable declines. Analysts attributed the pullback to profit‑taking after years of concentrated gains, renewed concerns about overvaluation, and institutional rotation into more defensive sectors. Several reports highlighted that hedge funds and large asset managers have been steadily reallocating capital away from tech since late 2025, a trend that has intensified in early 2026.

The “Magnificent Seven” tech giants, which had dominated market performance for multiple years, saw mixed results, with several leaders—including Nvidia and Apple—posting losses. Broader market indicators suggested that smaller companies and equal‑weighted indices outperformed, signalling a potential shift away from the era of mega‑cap concentration.

In contrast, defence stocks rallied sharply following signals from the U.S. administration that military spending could rise dramatically. President Donald Trump’s proposal for a $1.5 trillion defence budget for 2027 triggered strong gains across major contractors such as Lockheed Martin, Northrop Grumman, and RTX, with some firms recording their best single‑day performance in years. Additional policy announcements—such as restrictions on dividends and buybacks for defence companies until production improves—also influenced investor behaviour, reinforcing expectations of increased government demand.

Geopolitical developments further contributed to market unease. Recent U.S. military operations, including actions involving Venezuela and Iran, as well as tensions between major global powers, added to investor caution and supported the rotation into defence and other traditionally resilient sectors.

Bond markets reflected the uncertainty, with U.S. Treasury yields fluctuating as traders weighed mixed economic data and upcoming employment reports. Commodities also moved unevenly: gold and silver slipped after recent gains, while oil prices softened amid U.S. actions affecting Venezuela’s energy sector.

Overall, the day’s market movements underscored a broader shift in global investor sentiment—away from high‑growth technology names and toward sectors perceived as more stable during periods of geopolitical strain.