Which Industries’ Stocks Have Lost the Most Since the Iran War Started?

Key Takeaways

• Stocks have slid since the start of the Iran war, with the hardest-hit names in metals and mining, mortgage finance, residential construction, and packaging.
• Within metals and mining, Coeur, Hecla, and Southern Copper have posted the steepest losses, while Graphic Packaging, Silgan, and Amcor have led declines in packaging stocks.
• In the interest-rate-sensitive mortgage finance and residential construction industries, Rocket and Champion Homes have fallen the most.

Even as the Iran war’s effects across the US economy remains highly uncertain, some corners of the stock market have been hit hard. The Morningstar US Market Index is down 4.3% since the war began on Feb. 28, with some industries tumbling even further. Metals and mining industries—particularly gold and copper—have seen the worst of it. Mortgage finance, residential construction, and packaging stocks have also seen significant losses.

A common thread across these industries is a direct or indirect vulnerability to inflation and rising interest rates. With oil prices surging due to the war, worries about inflation have been revived. Additionally, bond yields have been rising and investors are bracing for possible rate increases by major central banks.

In contrast, oil- and gas-related industries have benefited from soaring energy prices. The Morningstar Global Oil and Gas Exploration and Production Index has performed particularly well, rising 11.4% since the start of the war. The Morningstar Global Oil and Gas Integrated Index has climbed 8.6%, while the Morningstar Global Oil and Gas Refining and Marketing Index is up 3.6%.

Metals and Mining Stocks Whipsaw Lower

After surging 22.6% through the first two months of the year, the Morningstar Global Metals and Mining Index has given back all of its gains since the onset of the war and is now down 22.8%. The price of gold has tumbled to around $4,400 as of March 24, down from over $5,400 at the start of March.

Among the holdings of the US Market Index, the worst-performing mining stocks over that period have been Coeur Mining CDE, down 34%, Hecla Mining HL, down 28%, and Southern Copper SCCO, down 27%. Among the US-listed stocks under Morningstar analyst coverage, Newmont NEM is down 24%, and Freeport-McMoRan FCX is down 19%.

Two distinct dynamics are unfolding: one for base metals like copper, which are highly sensitive to economic cycles, and another for precious metals such as gold, which typically act as safe assets during periods of uncertainty, according to Morningstar equity analyst Jon Mills.

Inflation Worries Hit Metals Stocks

For base metals, “Higher oil prices as a result of the Iran war suggest inflation will rise, with central banks responding by increasing interest rates to get inflation back under control,” Mills says. “This is bearish for commodity demand, which is driven by economic growth and industrial production, and why base metals such as copper have fallen since the start of hostilities.”

Precious metals like gold are typically seen as safe havens during periods of geopolitical or macroeconomic uncertainty. But gold’s recent surge—tripling since the start of 2024—has far outpaced fundamental support, according to Mills. “We think the war has seen a healthy reduction in the speculative frenzy that had driven the gold price higher (and silver too), leading to the fundamentals of supply and demand starting to reassert themselves,” he says.

In short, cyclical base metals are weakening on growth fears, while gold is cooling as a two-year speculation-driven rally reverts to fundamentals.

Packaging Stocks Dip on Rising Energy Costs and Recession Worries

Another hard-hit corner of the market is the packaging industry, with the Morningstar Global Packaging and Containers Index tumbling 4% since the start of the war. Within the US Market Index, the worst-performing packaging and containers stocks over this period have been Graphic Packaging Holding GPK, down 23%, Silgan Holdings SLGN, down 19%, and Amcor AMCR, also down 19%. Among the US-listed stocks under Morningstar analyst coverage, Amcor and International Paper IP, down 18%, performed worst. Ball BALL, down 13%, and Packaging Corporation of America PKG, down 9%, are also under Morningstar analyst coverage.

Morningstar equity analyst Krzysztof Smalec says the selloff in packaging stocks likely reflects a mix of rising energy costs and concerns of an economic slowdown. “Packaging is an energy-intensive industry, so the spike in energy prices might compress margins,” he says. “For example, higher oil prices increase costs for plastic packaging.”

At the same time, he notes that investors may be concerned about an economic slowdown, which would especially impact cyclical industries like packaging. Additionally, Smalec points to possible supply chain disruptions, shipping disruptions, and higher freight costs as risks to the industry amid a war.

Mortgage Finance and Residential Construction Stocks Also Slump

Other hard-hit areas include mortgage finance and residential construction, industries that are vulnerable to rising interest rates. The Morningstar Global Mortgage Finance Index—which tracks the performance of companies that deal with home mortgage and equity loans—has dropped 17.0% since the start of the war, led by narrow-moat Rocket Companies RKT, down 21.6%. Meanwhile the Morningstar Global Residential Construction Index has retreated 16.0%, with Champion Homes SKY down 19.5%, Lennar LEN down 19.4%, and Meritage Homes MTH down 18.1%.