JPMorgan: International stocks up 8% YTD, outpacing US
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- International stocks outperformed U.S. peers by 12% in 2025 and are already 8% ahead in 2026, according to JPMorgan's global equity strategy head.
- Mislav Matejka projects that the outperformance will broaden to small and mid‑cap stocks, aided by a weakening dollar and well‑behaved inflation.
- Valuation differentials favor emerging and international equities, while U.S. markets remain heavily weighted in the Magnificent Seven, creating “extreme positioning.”
- Geopolitical risk from a potential escalation with Iran is noted, but JPMorgan sees any market dips as buying opportunities.
- U.S. manufacturing activity is at three‑year highs per the Institute for Supply Management, bolstering 2026 forecasts.
- Inflation pressures are softening, wage growth is slowing, and the Fed is expected to maintain an easing bias, supporting lower bond yields.
- Brent oil is seen as over‑priced by $7‑$10, with current levels driven by temporary supply disruptions and cold‑weather demand; a conflict in Iran could alter this view.
Why it matters: Investors who tilt toward foreign and emerging‑market funds stand to capture the 8%‑plus 2026 outperformance, while U.S.‑centric portfolios risk lagging as the dollar weakens and the Fed leans toward easing; the view also signals lower bond yields and a potential re‑pricing of Brent oil if geopolitical tensions rise.
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