Investors scale back ‘Sell America’ bets amid Iran war market rotation
The Iran war is forcing a rapid rethink among U.S.-wary global investors, who are increasingly scaling back their ‘Sell America’ bets and instead seeking sanctuary in the world’s largest and most liquid market. Nick Nelson, head of global equity strategy at Absolute Strategy Research, said that in the run-up to the conflict, the U.S. had “pretty much” been the worst performing major market. Since then, it has switched to broadly being the best, he explained. “If you look at what’s happened at a regional, at a sector level, at a style level, it is risk-off but it’s actually more rotation,” Nelson told CNBC’s “Squawk Box Europe” Thursday. “Winners have become losers, losers have become winners.” The so-called ‘ Sell America ‘ trade emerged from the turmoil of U.S. President Donald Trump’s sweeping ‘Liberation Day’ tariff announcements in April 2025, which prompted investors to cut exposure to U.S. assets. Now, though, the war in the Middle East is causing many investors to re-tilt their portfolios, as U.S. markets appear to have weathered the pendulum swings better than European peers. Speaking as oil prices once again rallied above $100 a barrel in early trading on Thursday, Nelson said the U.S. — a net exporter of energy — benefits from the presence of several energy majors. In contrast, Europe and Asia are net importers of oil and gas, with energy companies representing a much smaller segment of stock markets in each region. .SPX 1M mountain S & P 500. The shift has also helped boost the dollar in recent weeks. “There are a lot of advantages, when times are tough, of being the large liquid market that people can basically repatriate assets to,” Nelson said. He also highlighted how several defensive sectors — including consumer staples, food, beverage, tobacco, healthcare, and telecoms — have underperformed during recent gyrations. “That’s telling me it’s really more about a rotation rather than just a straight risk-off,” Nelson added. @CL.1 1M mountain West Texas Intermediate. The U.S. is not the only market impacted by a recalibration of investors’ geographic focus. Nelson said being overweight Japan relative to Europe, for example, was beneficial for investors who “don’t want to make a high beta bet… don’t want to make a high bet on oil.” “Both are high beta markets, both are negatively impacted by oil, but Japan has got the best earnings revisions of any of the markets,” he added.
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