U.S. Exceptionalism Begins to Wane in Markets
A role reversal’s potential ripple effect leads market commentary. Plus, swings in sterling, FOMO in China and more.
Wall Street hits a wall.
Photographer: Victor J. Blue/BloombergEquity markets in the U.S. soundly outperformed the rest of the world last year, and that trend carried over into 2019. But lately, they’ve ceded ground. If it continues, the implications may be significant.
The MSCI USA Index surged 11 percent between the start of the year and mid-February, compared with a 7.35 percent advance for the MSCI All-Country World Index excluding the U.S. Since then, the USA index has risen just 0.60 percent, versus a 1.39 percent gain for the All-Country index. The amounts aren’t huge, but it’s the shift that’s important, and the timing. It comes amid reports that President Donald Trump is pressing his trade negotiators to come up with a deal with China sooner rather than later, thinking it would give the stock market a boost. But the longer U.S. stocks lag, the more China may feel it has additional leverage in the talks, knowing that Trump is closely watching the stocks market as a scorecard. “As soon as these trade deals are done, if they get done, and we are working with China, we’ll see what happens, but I think you’re going to see a very big spike,” Trump told reporters at the White House on Friday.