'Winners have become losers': war with Iran has caused capital to rotate back to the US

The new war in the Persian Gulf is forcing global investors, who were previously wary of U.S. assets, to quickly reassess their positions. Now they are increasingly turning away from the principle of "Sell America" (Sell America) and instead, on the contrary, seeking refuge in the largest and most liquid market in the world, writes CNBC.

In the run-up to the conflict with Iran, the U.S. was pretty much the worst-performing major market in terms of momentum, but since then the U.S. market has generally gained, Nick Nelson, head of global equity strategy at Absolute Strategy Research, told CNBC.

"If you look at what's happening at the level of regions, sectors and investment strategies, it looks formally like risk aversion, but in reality it's more like rotation," Nelson said Thursday on CNBC. - Winners have become losers, losers have become winners."

Sell America strategy emerged after the introduction of import duties by U.S. President Donald Trump in April 2025: the shock caused by them prompted investors to reduce investments in U.S. assets, explains CNBC. Now the war in the Middle East is forcing many investors to change the structure of portfolios again, as the U.S. markets seem to have survived these sharp fluctuations better than European markets, the channel writes.

The U.S., as an energy exporter, benefits from the presence of several large energy companies in the market, Nelson noted in light of the fact that the price of Brent crude oil rose back above $100 a barrel on Thursday, March 12. Europe and Asia, by contrast, are oil and gas importers, and energy companies have a much smaller share of those regions' stock markets. That shift in recent weeks has also helped the dollar strengthen, the analyst said.

"When times get tough, a large liquid market has many advantages: that's where investors can essentially repatriate assets," Nelson said. He also pointed out that several defensive sectors, including consumer staples, food, beverages, tobacco, health care and telecommunications, have shown weaker performance during recent market swings. "That suggests to me that this is more about rotation rather than just outright risk aversion," Nelson added.

The USA is not the only market, which was affected by investors' overestimation of geographical distribution of investments. According to the analyst, the high proportion of Japanese assets in the portfolio compared to Europe, for example, has been favorable for investors. "Both markets are highly volatile, both are negatively affected by oil, but Japan has the best earnings forecast revisions of all markets," Nelson argues.

Since the initial strikes on Iran, the S&P 500 index is down about 1.4% from its value at the start of the year and is only about 3% below the record high reached in late January, Barron's calculates.

In trading on Thursday, U.S. stocks fell sharply: the broad market index S&P 500 fell by 1.52%, the technology sector index Nasdaq Composite lost 1.8%, and the index of "blue chips" Dow Jones Industrial Average fell by 1.6%. Oil futures contracts rose in price: Brent added more than 10% and exceeded $101 per barrel, while WTI reached $96.3 per barrel after a similar jump, despite the measures taken by the U.S. to curb the rise in fuel prices.

This article was AI-translated and verified by a human editor