This week, the global financial markets are in the spotlight after US airstrikes were launched on three Iranian nucleus facilities at the weekend. In response, Tehran attacked the US bases located in Qatar.
US military action to curb Tehran’s nuclear aspirations has raised fears that a wider conflict will break out in the Middle East. This is especially true since Trump declared a ceasefire, which Israel and Iran both reportedly broke on Tuesday.
In addition to the geopolitical tensions, another trend has emerged that indicates a significant shift in the investor’s strategy. This is the growth of foreign stocks.
Investors are increasingly looking outside of the US economy to find lucrative returns due to geopolitical tensions and concerns about the USD’s resilience.
International stocks are increasingly popular with fund managers
According to the latest Bank of America fund manager survey, global investors believe that foreign stocks will be a more profitable investment than US equivalents over the next five-year period.
Michael Hartnett’s latest report, chief investment strategist at the bank, stated that “less than a quarter” of respondents believe US assets will dominate returns. Only 5.0% expect bonds to be best performers.
It is a significant shift for large institutional investors, who, up until relatively recently, were largely overweight US technology giants.
The iShares MSCI All-Country World Index ETF (excluding US), or “ACWX”, is up 15% this year. This is a much better performance than the.6% that the S&P 500 Index has managed to gain in 2025.
This year, the performance of the international fund is the strongest since 2008 when it was first launched. It shows that investors have a very bullish outlook for stocks in the second half of the 2025.
The dollar is no longer the currency of choice for global investors.
USD positions have fallen to levels that investors had not seen for more than 20 years, after President Donald Trump’s aggressive trade policy and the return of geopolitical risk in the Middle East.
The conflict between Israel and Iran is increasing interest in stocks internationally
This attack has strained the fragile Middle East relations.
Israel, an ally of the United States and a long-time enemy of Iran, will likely be drawn further into the crisis. This raises the stakes in the region, and by extension the global markets.
Investors appear to have hedged elsewhere, but energy prices are rising due to supply worries.
The gold, which has long been the asset of choice in crisis situations, is experiencing renewed interest. Hartnett reports that 41% of the fund managers who were surveyed said “long gold” is the most popular trade.
This dethrones “Magnificent 7”, the U.S. technology trade that had been dominating investor portfolios over the past two years.
Emerging markets have also been gaining in popularity. Investors increased their allocations in June to Eurozone shares, financials and emerging markets while decreasing exposure to U.S. stocks, energy and the dollar.
This indicates a rising appetite for diversification in the face of geopolitical uncertainties.
The long-term effects of the US/Iran conflict are still unclear. However, in the near term, the response from the stock market is becoming more decisive. In a world roiled by war and unrest, global equities have been hailed as a great investment for the coming five years.
The post International Stocks dubbed Best Trade for 5 Years as Israel and Iran violate ceasefire could be updated as new developments unfold.
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