After the Strait of Hormuz closure, BCA Research upgrades the ratings of Canada and Australia

LootboxPhobia · 2026-03-04T18:25:32+00:00

BCA Research has upgraded its outlook for energy surplus countries in its latest report, particularly Canadian and Australian stocks, and has raised the tail risk hedging strategy to "maximum overweight." Despite facing upward pressure on oil prices, the firm still recommends maintaining an overweight position in global stocks to seize recovery opportunities, while remaining cautious of the impact of war on the markets.

LootboxPhobia

2026-03-04 18:25:32

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Investing.com - BCA Research significantly upgraded its outlook for energy surplus countries in a report on Tuesday, as the actual closure of the Strait of Hormuz reshapes global trade conditions. Chief Strategist Juan Correa acknowledged, “The closure of the Strait of Hormuz is one of the key risks we flagged for a positive outlook on risk assets, and it has now become a reality.”

The firm has officially upgraded Canadian and Australian stocks to overweight, moving them from neutral and underweight positions, respectively. This shift reflects a strategic move toward “energy surplus countries” to diversify risks from direct conflict impacts.

In a major tactical move, tail risk hedging strategies have been raised from overweight to a “maximum overweight” recommendation. Correa explained, “Our tail risk protection should continue to prove useful,” with the firm targeting the execution of September 30th SPY put options at a strike price of 610.

Currency allocations have also undergone significant changes, with BCA upgrading both the Canadian dollar and Australian dollar to overweight. As global energy prices remain high, these currencies are expected to benefit from favorable trade condition shifts.

The strategist’s base case remains that the conflict will be resolved quickly, which could lead to a sharp rebound in risk assets. However, the firm remains cautious on expensive consumer stocks, which face substantial pressure from rising oil prices and shrinking disposable income.

BCA recommends investors maintain an overweight position in global equities while using convexity tools to hedge against further pullbacks. This balanced approach aims to capture potential recovery opportunities while shielding portfolios from the impact of “U.S. military recklessness” and its effect on global energy costs.

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