Citigroup Inc. strategist Beata Manthey upgraded UK equities to overweight from underweight, arguing they act as a robust hedge against geopolitical turmoil following the Iran conflict. Manthey's team contends the UK market's heavy tilt toward commodities and defensive sectors, including aerospace and defense, insulates it from rising oil prices. £79 a barrel oil prices surged 8% on Monday, the most in four years, underscoring the strategic rationale. While global equities historically recover quickly post-conflict, sustained higher energy costs can trigger significant downside, Manthey noted.

She concurrently downgraded Japan to underweight, as its stocks typically underperform when oil prices rise. The FTSE 100 outperformed European peers like the Stoxx 600 on Monday, driven by gains in defense and commodities stocks.