Driven by a strong economy and investor enthusiasm in technology and AI industries, JPM Chase & Co. (JPM, Financial) strategists project that US stocks will keep outperforming their international counterparts in 2025.
Under a report headed by strategist Mislav Matejka, JPMorgan underscored the valuation differential between US stocks and foreign counterparts, noting that US equities today trade at a 60% premium to overseas stocks based on expected price-to-earnings ratios. This graph reflects the 26% increase in the S&P 500's return in 2024, well above the MSCI World Ex-USA Index, which rose just 3.5%.
Matejka underlined that although US stocks have great values, the multiples of foreign markets remain somewhat undemanding, thus "the current phase of polarized regional market performances is likely to extend." Pointing out President-elect Donald Trump's proposed trade policies, which include tariffs targeted at significant trading partners such Canada, Mexico, China, and maybe Europe, the analysts also linked the tendency for US assets to political events. These policies should reduce trade disputes and increase US market dominance.
