Iran war sparks market rotation as winners turn into losers

The escalating conflict involving Iran in the Middle East is triggering a significant shift in global financial markets, forcing investors to rethink some of the most popular trades of recent months. Assets that had previously been market leaders are losing momentum, while U.S. assets—previously under pressure—are regaining favor among global investors.

Earlier in 2025 and early 2026, one of the dominant strategies in global markets was the so‑called “Sell America” trade. Investors had been rotating capital toward Asian equities and emerging markets, betting that global growth outside the United States would outperform. The outbreak of conflict in the Middle East has disrupted that narrative, as geopolitical risk and energy market volatility increase.

Analysts note that the United States is relatively less exposed to energy supply shocks than many other economies, which has helped the U.S. dollar strengthen during the turmoil. The depth and liquidity of U.S. financial markets have also attracted investors seeking safer and more stable assets amid rising geopolitical uncertainty.

As a result, currencies and equities that previously led global gains have come under pressure, while U.S. assets have stabilized or strengthened. Market strategists say the durability of this rotation will largely depend on how the conflict evolves and whether disruptions to global energy flows intensify, potentially reshaping inflation expectations and investment strategies worldwide.