We get it—there’s enough chaos unfolding in the US right now to hold your attention for a lifetime.
But savvy investors are tuning out the noise and looking abroad.
President Trump gave the market a bump when he was elected, but global stocks are outperforming American companies in 2025—and strategists say international equities still have further to run.
The iShares MSCI All Country World Index ex-US ETF (has a certain ring to it, doesn’t it?) is up 8.22% this year, outpacing the S&P 500’s gain of 4.45% over the same period.
Europe is responsible for a lot of the international market’s bull run. The Euro Stoxx 600 reached an all-time high yesterday, and is up 9.11% this year so far.
But things are going well on the other side of the globe as well. “Chinese tech shares have rallied over 25% since mid-January amid a positive re-rating as the emergence of DeepSeek rekindled investor optimism over AI innovation in China,” wrote UBS Global Wealth Management Chief Investment Officer Mark Haefele in a note today.
The tables have turned
This dynamic might come as a surprise, given that global stocks have been trailing the US market for the better part of a decade.
While the AI trade is still alive and well in the US, it’s clear that much of the juice has been squeezed out of the Big Tech companies that have grown to dominate the broader market (we’re looking at you, Nvidia). In fact, 89% of money managers said in a recent Bank of America survey that they think US equities are currently overvalued.
Making sense of market moves
Stay up to date on the latest market news with daily analysis of the investing landscape, served up Brew-style.
Some international central banks are lowering rates at a faster pace than the US, which could be a boost to global economies. The European Central Bank cut rates last month, Australia’s central bank cut interest rates for the first time in four years just today, and China has been pursuing an aggressive stimulus plan to revive its beleaguered economy.
But there are certainly risks to global stocks, too. Trump’s tariffs could hit international companies hard across an array of sectors, and the uncertainty regarding the Ukraine peace deal could pose a challenge to the European economy.
Then again, a peace deal could boost the European economy if implemented, and tariffs could end up handicapping American businesses and make some international trades seem more attractive.
The bottom line: “While we expect volatility to pick up in the near term amid a range of macro uncertainties, favorable fundamentals should continue to support global equities’ next leg up,” explained Haefele.—LB