U.S. stocks have dominated global results in recent years, as other markets have been challenged by a multitude of headwinds, ranging from Eurozone politics to the strength of the U.S dollar to skittishness over China’s economy.
Markets are cyclical, and history shows that the pendulum eventually swings back the other way. This reversal may well be underway as we are beginning to see some encouraging signs for non-U.S. equities.
1. Tide Appears to Be Turning in Europe
In my view, the outlook for picking stocks in Europe is now more constructive. After lurching from crisis to crisis over the past several years, Europe appears to be stabilizing on the political and economic fronts, and this advancement should help alleviate some of the uncertainty that has weighed on equities there.
After a wave of populism spooked the markets, political risks seem to be ebbing. Namely, Emmanuel Macron’s presidential victory in France on a business friendly and pro-European Union platform was a key turning point. Along with Macron’s triumph, other centrist politicians across Europe appear to be beating back a populist backlash against the EU.