NYT: “America First Policy Goes the Opposite Direction Shortly After Inauguration”
(Seoul=Yonhap News) Reporter Hwang Jung-woo: Following the inauguration of U.S. President Donald Trump, global stock markets have shown a downward trend in the U.S., while China and Europe have experienced an upward trend.
Since President Trump’s inauguration on January 20, the S&P 500 index of the New York Stock Exchange has fallen by 6.0%. Meanwhile, during this period, Europe’s Stoxx Europe 600 index has risen by 4.4%, with major European indices such as Germany’s DAX (10.1%), France’s CAC 40 (4.1%), and the UK’s FTSE 100 (1.5%) also increasing.
The German political scene’s push for a massive infrastructure and defense budget has raised expectations for economic stimulation, boosting the index. Trump’s threats to withdraw from Europe’s security along with demands for NATO European members to increase defense spending have also driven up European defense companies’ stock prices, contributing to the index’s rise.
Driven by Chinese leadership’s efforts for economic stimulus, Hong Kong’s Hang Seng index surged by 20.2%, and the Hong Kong H-share index (HSCEI) jumped by 22.7%.
Though President Trump pledged to usher in an “Era of American Exceptionalism” with “Make America Great Again” (MAGA), the initial outcome of his presidency was the complete opposite, according to an evaluation by the New York Times (NYT).
Due to uncertainties in the U.S. stock market caused by President Trump’s tariff policies and significant federal budget cuts, asset management firms have started guiding their clients toward other global stock markets, the NYT reported.
Zitanii Kandhari of Morgan Stanley Investment Management’s Solutions & Multi-Asset Group noted that “now is certainly a time to focus outside the U.S.” and mentioned an increase in discussions with clients looking to enhance their exposure to overseas stocks.
In recent weeks, Wall Street has been flooded with investment bank reports, client briefings, and trading ideas recommending investments abroad, the NYT conveyed.
JP Morgan’s chief economist Bruce Kasman held a client briefing under the title “Respecting Resilience, American Exceptionalism is Faded, and Worries About Policy Shocks.”
MFS Investment Management’s market strategist Brad Lutan commented that there are plenty of opportunities outside the U.S., suggesting it is not an overstatement to say it’s time to invest in foreign stocks.
According to market research firm EPFR Global’s weekly data, funds were withdrawn from U.S. stock funds for the first time this year, amounting to $2.5 billion.
Attention is focused on whether a turning point reversing the long-standing trend of “American Exceptionalism” might be beginning.
The future direction of the U.S. stock market is likely to be influenced by whether long-term investors like pension funds, which can take months to change portfolios, will move toward asset redistribution.
Greg Boutle, head of U.S. equities and derivatives strategy at BNP Paribas, stated, “The situation cannot reverse 180 degrees in just a month after the U.S. has outperformed Europe for an extended period,” adding there are probably many investors who have yet to redistribute their assets.
However, there remains an optimistic view of the U.S. stock market from a long-term perspective, with some expecting it to outperform overseas markets again, as reported by the NYT.
There is also analysis suggesting that while Europe might stimulate growth by increasing fiscal spending, if the U.S. falls into a recession, the rest of the world will not escape its impact.
Paul Christopher, global market strategist at Wells Fargo Investment Institute, remarked, “In the end, as all this uncertainty subsides, the U.S. will be left with advantages other countries don’t have.”