Global ex-US Equities Outperform the S&P 500 in 2025
2025 is proving to be a year of change when it comes to the geographical distribution of equity market performance. After years of dominance by U.S. stock markets, the bulk of gains is now being realized elsewhere. Let’s take a look at the relationship between Global Equities ex-US and the S&P 500.
In 2024, global equity performance was driven almost exclusively by the United States, particularly by the so-called “Magnificent 7” tech stocks, with the MSCI World Index rising 19%. However, the MSCI EAFE Index (which represents developed markets excluding the U.S. and Canada) posted only a 4% gain — around 15 percentage points lower than the U.S. market.
However, things seem to have shifted significantly in 2025. The MSCI ACWI ex U.S. index has posted a year-to-date (YTD) performance of 16.5%, while the global equity index including the United States is up just over 7%.
This divergence is clearly visible when looking at the relative strength between global equities excluding the U.S. and the S&P 500. The turning point appears to come at the beginning of 2025, with an acceleration in March. After that, the upward move begins to fade, and while the medium-term trend still favors global equities ex-US, May shows a resurgence of strength from U.S. equities.
It’s evident that the dynamics between the two indices have been, and still are, influenced by international trade tensions. As uncertainty diminishes, U.S. equities may attempt to reclaim the dominant position they have held in recent years. But to do so, they will need strong performance from their leading sector: technology.
