Global defense stocks jumped on Monday as investors reacted to a dramatic military escalation in the Middle East over the weekend.

The sector was a rare bright spot amid a broader market sell-off triggered by fears of a wider regional conflict.

Germany’s Hensoldt and Britain’s BAE Systems were among the top performers in the Stoxx 600, both up around 4%. Defense names Thales, Renk, and Leonardo rose between 4% and 1%, paring earlier gains, while the broader Stoxx 600 index fell more than 1%, touching a two-week low.

Stateside, U.S. firms Lockheed Martin and Northrop Grumman each rose more than 5% in premarket trading. Futures tracking the S&P 500 were down 1.1%.

With South Korean markets closed Monday, regional activity in Asia-Pacific defense sector was somewhat muted. Japan’s defense heavyweights Mitsubishi Heavy Industries and IHI rose about 3% each, while Singapore’s ST Engineering climbed 2.8%.

The moves come after the U.S. and Israel launched widespread attacks on Iran over the weekend that killed Iranian Supreme Leader Ayatollah Ali Khamenei, ending his 36-year rule. Retaliatory strikes by Iran against U.S. bases in the Middle East killed three U.S. service members.

Prospects of an escalation also led oil prices and energy companies’ shares to surge.

“It’s very much one of uncertainty at the moment that investors are grappling with,” said Patrick O’Donnell, Chief Investment Strategist at Omnis Investments.

“Equity markets are a little bit more uncertain about just how long this is going to drag on, for the implication for both growth and inflation that it will have the longer that it goes on,” O’Donnell told CNBC’s “Squawk Box Europe” on Monday.

“Really, it’s a question of… what’s the duration of this conflict?”

The conflict with Iran entered a third day on Monday, with U.S. President Donald Trump warning of further American casualties and saying the conflict could last for up to four weeks. 

In June last year, the U.S. and Israel launched air strikes that damaged three Iranian nuclear sites.

Carl Bildt, former Prime Minister of Sweden and co-chair of ECFR’s Council, said it was expected that Iran would strike back at the American military facilities in the Gulf region, “but now it seems like they are striking other targets across the Gulf as well.”

“That is surprising, but also highly disturbing, because, of course, the stability of the Gulf countries is important to us all, important to the global economy, important to the region,” he said.

President Donald Trump on Friday said that “I’d love not to use” the U.S. military to attack Iran, “but sometimes you have to.”

But Trump also said, “We haven’t made a final decision” on whether to attack Iran.

“We’ll see what happens,” he said. “We’re talking later today. We’ll have some additional talks today.”

Trump’s comment to reporters outside the White House came after he expressed frustration at Iran’s refusal to comply with American demands to curb its nuclear program.

“We’re not thrilled with the way they’re negotiating,” Trump said. “They cannot have nuclear weapons.”

“I’m not happy that they’re not willing to give us what we have to have,” Trump said, referring to that condition.

Asked by a reporter if there could be a long, drawn-out conflict in the Middle East if the United States attacks Iran, Trump said, “I guess you could say there’s always a risk.”

“It’d be wonderful if they negotiate, really, in good conscience, good faith,” he said. “They are not getting there so far.”

Omani Foreign Minister Badr al-Busaidi, who has been mediating negotiations between the U.S. and Iran, met in Washington, D.C., with Vice President JD Vance and other American officials in a bid to avoid war.

A statement issued by Oman’s government after the meeting put a positive spin on those talks that was not reflected in Trump’s blunt comments.

“The meeting examined the indirect US-Iran negotiations sponsored by the Sultanate of Oman, alongside the diplomatic endeavours seeking to culminate in a just and enduring agreement concerning the nuclear file and to guarantee the peaceful character of Iran’s nuclear energy program,” Oman’s government said.

“I am grateful for their engagement and look forward to further and decisive progress in the coming days,” al-Busaidi said in a post on X. “Peace is within our reach.”

During an interview with MS Now, when asked if there was a chance of the United States attacking Iran overnight, al-Busaidi said, “I can’t answer that question, because I don’t know.”

“I think President Trump is sincerely passionate for a deal,” al-Busaidi said. “He wants to have a deal. He wants to have a diplomatic solution, and this is what we are trying to do.”

But Trump, in a speech later Friday afternoon in Corpus Christi, Texas, said of Iran, “We have a very big decision.”

“We have a country that’s been 47 years blowing people’s legs off, arms off,” Trump said. They’ve been knocking out ships, killing people, lots of people, not only Americans, lots of people.”

Trump said he wanted to “make a deal that’s meaningful.”

“I’d rather do it the peaceful way,” Trump said, while calling Iran’s government “very difficult people, dangerous people, very difficult people.”

The U.S. Embassy in Jerusalem earlier Friday authorized non-emergency U.S. government personnel and their family members to leave Israel “due to safety risks.”

Also Friday, the massive American aircraft carrier, the USS Gerald Ford, arrived off Israel’s coast.

Also on Friday, the State Department said that Secretary of State Marco Rubio would visit Israel on Monday and Tuesday to discuss Iran and other regional issues.