The U.S. stock market has been partying for much of November, but it hasn’t invited the rest of the world to join the party. Markets were mixed after early losses on Tuesday, with the S&P 500 and other major averages notching strong gains for the month. The large-cap benchmark rose more than 3% in November, bolstered by President Donald Trump’s return to the White House for a second term. However, the U.S. market isn’t spreading the love. As U.S. stocks rose, global stock markets fell sharply, the result of a combination of factors. Nick Colas, co-founder of DataTrek Research, said: “Non-U.S. equity (year-to-date) dollar-based returns have gone from respectable to poor returns in just seven weeks, partly because of exchange rates and partly because of It’s local markets that underperformed. “No major single country stock index provided an effective hiding place from the sell-off in the rest of the world in the fourth quarter. The iShares MSCI ACWI U.S. ETF (ACWX) is an effective proxy for this trend. The fund measures the performance of global stocks minus U.S. stocks, including companies such as TSMC, Tencent and Novo Nordisk. ACWX .SPX 3M line International stocks vs. domestic Stocks vs. ACWX fell 1.7% in November and is up just 5% year to date. The fund was down about 0.2% in early trading on Tuesday, underperforming the broader S&P 500 index, which has surged nearly 24% so far this year. One is that the U.S. dollar has outperformed against global currencies. The U.S. dollar index rose more than 2% in November and is up nearly 5% so far this year. A strong dollar reduces the value of foreign currency assets and makes U.S. exports more expensive in other countries. It could also hurt U.S.-domiciled multinationals, but so far it hasn’t had a major impact .DXY 3M Line U.S. Dollar Index The underperformance of global equities could provide some temptation to buy if shares look undervalued, but given Trump’s plans to launch. Warning of a new round of protectionist trade policies, Colas wrote: “We remain more bullish on U.S. equities compared with the rest of the world, despite the latter’s apparent underperformance this year. Statistically cheaper, and non-U.S. currencies are likely to rebound soon. “U.S. government policy next year will be very different from the past four years, and it will be difficult for global asset owners to justify investing in international stock markets,” Colas added. Incremental allocation is reasonable unless we know exactly how different the situation is.”
Global stock returns disappear as U.S. stocks soar | Real Time Headlines
RELATED ARTICLES