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US stocks have slumped global performance this year at the widest margin for over 30 years as Donald Trump’s volatile policymaking has led to investors’ exodus from American assets.
The MSCI USA Index, a wide range of US stocks, lost 11% in the first 16 weeks of the year. The MSCI All World Ex-US benchmark rose 4% over the same period under the $1 condition. This was the biggest gap with Wall Street in 1993, when US investors’ enthusiasm for inventory surged in 1993 with concerns about trade liberalization and domestic economy.
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Performance’s Gulf Coast highlights investors’ expectations that Trump’s tariff blitz will take a major blow to the US economy by undermining growth and driving inflation than other economies. This gap was particularly prominent in Europe, with US isolationism spurring a pledge of increased government spending, particularly on defense, which is expected to boost the local economy and support the stock market.
“The majority of this unperformance is the re-recordation of US assets due to increased policy uncertainty and bull shock from tariffs,” said Samea Goel, head of emerging markets and APAC research at Deutsche Bank.
Tumbling greenbacks helped widen the performance gap. This year, a decline of 8% against a basket of six major currencies, including the euro and yen, boosted performance in the non-US market on dollar terms.
Investors have bet that US stocks will continue to outperform their peers elsewhere as Trump’s tax cuts support corporate profits. But that view was quickly unleashed after the US president launched a much more aggressive trade war than most investors expected.
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The S&P 500 fell 12% a week following Trump’s “liberation day” tariff announcement on April 2. Since then, Trump has recouped many of those losses as he reversed or delayed some of his tariffs, but has fallen behind global rivals such as Hong Kong’s Hangsen and the Stoxx Europe 600.
In Europe, defense stocks such as German Rhinemetal, Italian Leonardo and UK Rolls-Royce have led to higher indicators, boosted by regional plans to increase military spending to reduce dependence on the US. Germany’s DAX index has grown by more than 20% this year under the dollar terms, while France’s CAC 40 has risen by about 12%.
“We are pleased to announce that we are committed to providing a range of services to our customers,” said Lewis Grant, senior portfolio manager for Global Equity at Federated Hermes.
In Asia, Hang Seng has grown 10% on the dollar terms this year, led by Chinese tech stocks following the launch of the AI model by Start-up Deepseek, claiming it was trained in some of the costs and computing power of US rivals such as Openai.
