Donald Trump’s election victory was greeted euphorically in the US, but the mood was very different elsewhere.
Even as US indices roared higher, stocks in Europe and elsewhere sank. Bespoke Investment notes there have been only two other days where the spread between US and non-US markets was wider – during the financial crisis shortly after the 2008 presidential election, and the day after June 2016′s Brexit vote.
Non-US investors worry about Trump imposing tariffs of up to 20 per cent on American imports, with an even higher 60 per cent levy on Chinese goods.
A Trump win is “Europe’s worst economic nightmare”, says ING, potentially pushing the “sluggish” European economy into “full-blown recession”. Barclays is also cautious, saying European stocks will probably “continue lagging” their US counterparts.
The extent of the post-election performance gulf was exceptional, but it continues a long trend of US outperformance.
“Will international stocks ever outperform again?” asks Bespoke Investment, which notes the “one-way move in favour of US stocks for over a decade now”, with the Trump win only adding “fuel to the US rocket ship”.
