Heterogeneous Market Reactions to the 2024 Hezbollah–Iran–Israel Escalation: Evidence of Conflict-Beneficiary Behavior in Energy-Sector Stocks

This study investigates the short-term impact of tightly timed escalation shocks in the 2024 Hezbollah–Iran–Israel conflict on abnormal returns across financial and commodity markets, with particular emphasis on identifying conflict-beneficiary assets. Using a benchmark-adjusted event study analysis, we examine logarithmic returns for 80 assets across four groups–safe-haven assets, energy commodities, energy-sector equities, and the S&P 500 index–based on a 120-day estimation window and two exogenous escalation events on 18 September and 1 October 2024. The findings indicate that energy-sector equities exhibit conflict-beneficiary behavior in response to the examined geopolitical shocks: both events generate statistically significant positive abnormal returns, which accumulate over short horizons and subsequently attenuate, with the second event producing stronger and more persistent effects. In contrast, safe-haven assets, energy commodities, and the broader equity market display no systematic abnormal performance. These results remain stable across robustness checks, including non-parametric inference, shortened estimation windows, and MANOVA, which confirms significant differences in abnormal-return patterns across asset classes. The study contributes to the literature by integrating heterogeneous asset classes within an ESA framework, employing two plausibly exogenous geopolitical escalations, and formally documenting differences in market responses across asset classes. The results suggest that, under the specific geopolitical conditions examined in this study, energy-sector equities may exhibit a conditional defensive role consistent with conflict-beneficiary behavior, providing insight into how markets reprice risk during conflict-driven disruptions. These findings have practical implications for hedging and tactical allocation under closely spaced geopolitical shocks, highlighting the importance of identifying assets whose payoffs mechanically improve under conflict conditions and cautioning against unconditional reliance on traditional safe-haven assets.