Bank of America Warns of Capital Outflow from "Oil-Importing Countries" Stock Markets, Safe-Haven Funds Shift to U.S. Tech and Defense

Odaily According to Michael Hartnett from Bank of America, a prolonged war involving Iran poses a risk to the bank-led rallies in Japan and Europe, as investors are abandoning these markets in favor of crude oil and the U.S. dollar. The strategist noted that investors might shift towards assets that are "beneficiaries of prolonged conflict," at the expense of "oil-importing countries with minimal exposure to energy stocks" such as South Korea, Japan, and Europe. U.S. technology stocks and the global defense industry are sectors likely to benefit from this rotation. This scenario has already begun to materialize since the U.S. and Israel launched attacks on Iran and the conflict expanded. European stock markets are heading for their worst weekly decline since the tariff turmoil of last April, and the same is true for Japan's Nikkei 225 index. The South Korean stock market has experienced significant volatility, with the KOSPI index recording both a record drop and its largest single-day gain since 2008. (Jin10)