Trump “Make global stock markets great again”? Non-US markets surge 30%, US stocks post worst underperformance in 33 years
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Although Donald Trump declared in his first year back at the White House that the US had become the world’s “hottest” country, the actual performance of financial markets painted a very different picture: Global stock markets significantly outperformed Wall Street in the first year of his term.
According to Bloomberg, since Trump took office a year ago, global stock markets excluding the US (measured by the MSCI index) have risen about 30%, roughly twice the gain of the S&P 500 index during the same period. This marks the most severe lag in US stocks relative to global markets in a president’s first year since 1993.
Although the S&P 500 index did not fall into a bear market and repeatedly hit new highs, according to CFRA data, the US stock gains in the first year of Trump’s second term only ranked ninth among all presidents since World War II. This performance not only lags behind Reagan, George H. W. Bush, Clinton, Obama, and Biden, but even falls short of Trump’s own first term.
Market analysts point out that while the AI boom and resilient economy have supported US stocks, a series of uncertainties brought by the Trump administration in trade, foreign policy, and challenges to the Federal Reserve’s independence have made investors uneasy. This policy turbulence is driving capital to flow faster into recovering markets in Asia, Europe, and Latin America.
Policy intervention triggers sharp volatility
At the end of 2024, investors expected Trump’s agenda of tax cuts and deregulation to further stimulate the economy, but reality has turned out to be more complex. Right at the start of his term, Trump triggered major market swings: he authorized billionaire Elon Musk to cut federal spending and broke with previous policies.
Additionally, Trump’s moves to exert broader control over key industries caught markets off guard. According to reports, these included claiming sovereignty over Venezuelan oil, attempting to instruct banks to limit credit card interest rates, criticizing defense contractors, and directing the federal government to invest in companies like Intel. Foreign policy surprises, such as pushing for the US to acquire Greenland, also added to market anxiety. In April of this year, his tariff policies plunged the market into turmoil, which eventually eased.
Rob Haworth, Senior Investment Strategist at Bank of America, said: “Winners and losers change very quickly; it’s tough for investors to stay agile.” Data from Barclays shows this volatility is particularly evident: in 2025, there were 47 declines of more than 5 standard deviations among the largest 100 S&P 500 constituents—the most since 1998.
Capital flows to non-US markets
Against a weaker US dollar in the first half of the year, a cooling US job market, and Trump pressuring European allies to increase defense spending, stock markets elsewhere around the globe began to shine. According to Bloomberg, the MSCI Emerging Markets Index rose over 30% last year, the biggest gain since 2017.
Craig Basinger, Chief Strategist at Purpose Investments, points out that the view that non-US stock markets will keep outperforming US markets is no longer contrarian—“capital is chasing performance.”
While US stocks have relatively lagged, their absolute returns remain impressive. The S&P 500 posted double-digit growth for the third consecutive year, and Wall Street forecasters remain optimistic about 2026. Rhys Williams, Chief Strategist at Wayve Capital Management LLC, believes that despite turmoil from the top, ignoring the noise and focusing on prices means the long-term boost from AI will continue pushing the economy in the right direction.
Midterm elections and Federal Reserve outlook uncertain
With the 2026 midterm elections approaching, markets are facing new risks. Historical data shows midterm years tend to see weaker stock performance, partly because an opposition party win can threaten a president’s agenda.
Facing low approval ratings and voter dissatisfaction with inflation and high interest rates, Trump has recently turned his focus to mortgage rates, credit card interest rates, and rising electricity costs driven by the AI data center boom. Moreover, Trump has put unprecedented pressure on the Federal Reserve, with his administration even launching a criminal investigation against current Chairman Jerome Powell—a move that has heightened concerns about central bank independence. With Powell’s term ending in May, Trump will appoint his successor.
Mark Hackett, Chief Strategist at Nationwide Funds Group, sums up:
“Midterm election years have always been the worst-performing on the calendar. In general, they tend to be highly contentious, and markets don’t like uncertainty.”
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