cnbc.com
International Markets Lag U.S. Equities Amidst Tariff Concerns and Slow Growth
International markets significantly lagged behind U.S. equities in 2024, with the iShares MSCI ACWI ex U.S. ETF (ACWX) up only 4.6% compared to the S&P 500's 26% gain; this is primarily due to a stronger dollar resulting from President-elect Trump's proposed tariffs, slow growth in Europe and China, and geopolitical uncertainties.
- How do President-elect Trump's proposed tariffs and their anticipated effects on the dollar contribute to the weak outlook for international markets?
- The underperformance of international markets is linked to President-elect Trump's proposed tariffs, which are expected to strengthen the dollar and hurt other countries' purchasing power. Economists predict slow growth in Europe and China, further dampening investor sentiment. The French and German governments' collapses exacerbate the situation.
- What are the primary factors contributing to the significant underperformance of international markets compared to U.S. equities in 2024, and what are the immediate implications?
- International markets significantly underperformed U.S. equities in 2024, with the iShares MSCI ACWI ex U.S. ETF (ACWX) up only 4.6% compared to the S&P 500's 26% gain. This disparity is attributed to factors like a stronger dollar, higher inflation risks, and geopolitical uncertainties, leading to a pessimistic outlook for 2025.
- What are the potential long-term impacts of the current economic and political climate on different international markets, and are there any specific regions or countries expected to perform better than others?
- The impact of Trump's tariffs is expected to be stagflationary for international equities, particularly impacting emerging markets in Southeast Asia and Central and Eastern Europe. However, some analysts suggest that the US-China trade war could boost EU competitiveness. Despite the overall pessimistic outlook, opportunities exist in Japan and India due to corporate governance reforms and strong domestic factors, respectively.
Cognitive Concepts
Framing Bias
The article's framing significantly emphasizes the negative aspects of the international market outlook. The headline (if there was one) likely would highlight the underperformance compared to US markets. The repeated mention of challenges and pessimistic quotes from various analysts contributes to a negative framing. This sets the tone early on and influences the reader's perception of the overall situation.
Language Bias
The article uses language that leans towards negativity. Phrases such as "drastically lagged," "doesn't look too promising," "growing unease," "bleak outlook," and "muddied outlook" contribute to a pessimistic tone. While these phrases might accurately reflect the views of the quoted experts, the cumulative effect is a negative narrative that could be mitigated with more neutral phrasing.
Bias by Omission
The article focuses heavily on negative perspectives of international markets, potentially omitting positive developments or counterarguments that could offer a more balanced view. While acknowledging some pockets of opportunity, the overall tone leans heavily towards pessimism. The article also doesn't delve into the specifics of the potential benefits of the proposed tariffs for the US, focusing primarily on the negative impacts for international markets. This could lead to a skewed understanding of the situation.
False Dichotomy
The article presents a somewhat false dichotomy by contrasting the strong performance of the US market with the weak performance of international markets, without fully exploring the nuances and complexities of global economic factors that might influence both. It simplifies a complex interplay of economic and political factors into a simplistic 'US win, rest lose' narrative.
Sustainable Development Goals
The article highlights that a stronger dollar due to US tariffs negatively impacts international markets, hurting other countries