After nearly a decade of being overshadowed by US equities, international stock markets are firmly back in focus. And according to investment strategists, the overseas rally that started in late 2024 is not just a short-lived trade.
Experts speaking on CNBC’s ETF Edge say 2026 could continue to favour global markets, driven by currency shifts, geopolitics, valuation gaps, and growing discomfort with US market concentration.
Why International Stocks Are Beating the US
The key shift began in November 2024, when international equities started to outperform US stocks. Since then, overseas markets have beaten US equities by roughly 15%, marking a clear inflection point after years of underperformance.
According to Tim Seymour of Seymour Asset Management, the problem for many investors is structural:
US investors remain heavily underweight global markets, despite international stocks representing 30–40% of global market capitalization.
Most US portfolios hold just 12–15% in non-US equities, leaving room for continued capital reallocation.
Three Major Tailwinds Driving Global Markets
1. A Weaker US Dollar
A declining dollar has boosted returns for US-based investors holding foreign assets, making overseas equities more attractive without any change in local stock prices.
2. Overconcentration in US Tech
Years of capital flowing into mega-cap US technology stocks have created valuation risks. Investors are now looking abroad for diversification, earnings growth, and cheaper entry points.
3. Commodities and Geopolitics
Gold, copper, and industrial metals have surged, benefiting commodity-heavy regions like Latin America. At the same time, global trade realignments are creating new winners outside the US.
Where Investors Are Looking Overseas
- Europe:
European banks, utilities, and industrials are gaining momentum as lower rates, fiscal spending, and deregulation kick in. Stocks such as Barclays, Santander, and Société Générale are increasingly viewed as attractive dividend plays. - Emerging Markets:
The iShares MSCI Emerging Markets ETF has returned 42% over the past year, while broader global exposure via the iShares MSCI ACWI ETF is up 20%, outperforming the S&P 500. - Latin America:
Rising metal prices have fueled standout performance in Chile, Peru, and Brazil. The iShares MSCI Brazil ETF is up nearly 49%, while Peru-focused exposure has surged even more. - Asia and Semiconductors:
South Korea has emerged as a major AI beneficiary. Memory chip leaders Samsung and SK Hynix dominate the market, helping the iShares MSCI South Korea ETF climb 125% over the past year. Investors are also reassessing non-US tech leaders like ASML and TSMC.
What About the Recent Pullback?
Some global trades briefly cooled after Donald Trump announced Kevin Warsh as his pick for Federal Reserve chair, easing fears of aggressive rate cuts and weakening metals prices.
Still, strategists argue the broader trend remains intact. Gold, silver, and platinum are all sharply higher year over year, and global diversification themes continue to gain traction.
The Big Picture
This is not about chasing last year’s winners. It is about rebalancing portfolios for a world that is no longer US-centric.
As global earnings improve, currencies shift, and trade becomes increasingly multi-directional, international markets are once again becoming a core part of diversified portfolios.
In short: the global rally may be well underway, but it is not over yet.
Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.
Related: Three Reasons Gold Hit Record Highs — and One Key Reason It’s Falling Now
