The "Sell America" strategy is currently paused

Investing.com - The recent escalation of Middle East conflicts has pushed global markets into risk-averse mode, but Barclays analysts say this shift has so far been orderly rather than panic-driven.

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Barclays strategist Emmanuel Cau told clients in a Friday report that although investors have reduced exposure to high-risk assets, “the de-risking process remains orderly, and there is little evidence so far of widespread panic selling.”

Market weakness is mainly concentrated outside the U.S., especially in regions that previously outperformed and are more sensitive to rising energy prices.

According to Barclays, “Stock market weakness is concentrated in Europe, Japan, and emerging markets,” which are more affected by rising energy costs.

In contrast, U.S. assets have shown relative resilience, prompting investors to pause broader withdrawals from the U.S. market.

Barclays noted, “Given the lower sensitivity of U.S. assets to energy costs, the strategy of selling U.S. assets and shifting to other global stock markets has been paused.”

Despite geopolitical shocks, the benchmark S&P 500 remains relatively stable, and volatility indicators have not surged significantly.

The analysts wrote, “The S&P 500 has hardly declined this week, and the VIX has not surged sharply,” indicating limited market concern about broader conflict impacts.

Barclays believes that the surge in oil prices may ultimately be temporary, although risks could increase if the conflict persists.

The firm stated, “The longer the conflict lasts, the greater the risk of stagflation, especially for regions outside the U.S. that depend on energy.”

Despite uncertainties, Barclays added that past geopolitical shocks have often created opportunities for investors. “While geopolitical shocks have caused short-term market disruptions, they have mostly provided good medium-term buying opportunities.”

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