4 charts that show Wall Street’s shaky start to 2025 — and how global markets are catching fire
It appears investors were wrong about
US President Donald Trump’s
second term in office.
Instead of the
Trump trade
boosting markets, his fast-changing economic and trade policies have sent US stock markets tanking since the January inauguration.
It doesn’t help that Trump and his officials have signaled a higher tolerance for
market volatility
than during his first term. Investors are scrambling for cover and boosting stock markets elsewhere in the world.
The
S&P 500,
Nasdaq Composite,
and
Dow Jones Industrial Average
have all retreated this year — a stark contrast to stock markets in Europe and Asia.
The
Euro Stoxx 50
index, Germany’s
DAX
index, and Britain’s
FTSE 100
have all advanced with gains boosted by a massive defense and government spending plan from Germany and other European countries.
Asia is up, too. Hong Kong’s
Hang Seng index
has jumped 20% on the back of the hype in Chinese artificial intelligence fueled by
DeepSeek’s
latest AI model and similar releases from local players.
This rotation marks a shift from the last decade of US equity outperformance compared to the rest of the world.
The rally in ex-US stocks isn’t just about a rotation out of American assets due to Trump’s policies. As Business Insider reported last summer, favorable economic conditions and
cheap valuations
in the rest of the world also play into the shift.
“The consensus wasn’t only too bullish about the US, it was also too bearish” on the rest of the world, wrote Dario Perkins, an economist at GlobalData.TS Lombard
,
in a Monday note.
Tech stocks feature prominently in the US market rout.
The “Magnificent Seven” technology stocks in the US have been almost universally slammed by the market sell-off.
Tesla
has had a uniquely bad time with shares down about 41% as of Monday’s close, in part because of concerns about Elon Musk’s leadership. Meanwhile,
Apple
has slid about 15%, and Google-parent
Alphabet
has dropped more than 13%.
But in Europe, some major contractors are winning on the heels of massive
government spending plans.
Shares of German industrial giant
Thyssenkrupp
and defense contractor
Rheinmetall
have both doubled this year.
In Asia,
AI hype
has spurred a Chinese tech stock rebound from a yearslong slump prompted by a state-backed crackdown and economic downturn.
Chinese leader Xi Jinping’s
personal endorsement of the private sector last month gave prices an extra push.
Chinese e-commerce giant
Alibaba’s
stock was up more than 60% for this year at Monday’s close.
Tencent
and
JD.com
were up about 26% and 24%, respectively.
US billionaires have not been spared from the wealth wipeout as their stock holdings lose value.
The top 10 biggest wealth losers this year include several high-profile tech executives.
Tesla CEO Elon Musk
was down $122 billion at Friday’s close, per the Bloomberg Billionaires Index. Oracle’s Larry Ellison and Amazon’s
Jeff Bezos
were down about $23 billion and $20 billion, respectively.
The greatest wealth gainers are led by
Berkshire Hathaway’s Warren Buffett,
up almost $19 billion, and TikTok investor Jess Yass, up $17 billion.
Chinese executives, including Xiaomi founder and CEO
Lei Jun
, Bytedance founder and ex-CEO Zhang Yiming, Tencent CEO Ma Huateng, and BYD founder and CEO
Wang Chuan-Fu
, also made the top 10 gainers.
Foreign-listed stocks aren’t the only winners from the US market rout.
Investors have also taken cover in several “haven” assets — some of which trade at modest valuations and tend to perform better in recessions than expensive, speculative assets.
The
US Dollar Index
has fallen nearly 5% against a basket of other global currencies, reflecting concerns about slowing US economic growth and greater investor certainty as the Trump administration pursues a sweeping tariff policy.
Bitcoin
has also dropped by more than 10% and
West Texas Intermediate
crude has softened by about 6%.
On the other hand, prices of precious metals
gold
and
silver
have soared well over 10% this year. Their gains have contributed to a jump in
copper
prices too.
US turmoil could spread globally
Despite the rally in global markets, analysts are wary about calling it a sustainable run. The US economy — the world’s largest, accounting for about a quarter of global GDP —could dive and affect markets far beyond its borders.
Perkins, from GlobalData.TS Lombard, said the outperformance in global equities could continue if the economic situation in the US did not deteriorate too much.
“There is a fine line between global investors relocating capital from the US to the rest of the world, against the backdrop of OK-ish US growth, and a generalized risk-off move that sends all risky assets lower,” wrote Perkins. “Make no mistake — a US recession would bring down the entire world.”
Read the original article on
Business Insider
