Ever since the presidential elections, the S&P 500 and U.S. stock exchange traded funds have unexpectedly pulled ahead of their global peers.
After global benchmarks mostly rallied in unison over the past five years, U.S. markets are enjoying a sudden lead in the ongoing bull market, reports Oliver Renick for Bloomberg.
The SPDR S&P 500 ETF (NYSEArca: SPY), iShares Core S&P 500 ETF (NYSEArca: IVV) and Vanguard 500 Index (NYSEArca: VOO) have all added about 5% since the November 8 election.
On the other hand, the MSCI Index of developed world markets outside the U.S. is only 1.4% higher while stocks have declined in developing countries, Asia and Latin America.
Specifically, the iShares MSCI World Index Fund (NYSEArca: URTH), which tracks world markets including a hefty 60% position in U.S. markets, is up 2.7% since November 8.
The iShares MSCI All Country Asia ex Japan ETF (NYSEArca: AAXJ), which includes major emerging Asian markets and excludes Japanese stock exposure, fell 7.1% since the elections.
The iShares MSCI Emerging Markets ETF (NYSEArca: EEM), which tracks the benchmark MSCI Emerging Markets Index of developing countries, dropped 5.8% over the same period.
Lastly, the iShares Latin American 40 ETF (NYSEArca: ILF), which includes 40 of the largest Latin American stocks in its portfolio, declined 11.2% since November 8.
“Since the election it’s been all about growth in the U.S., and growth is just not existent around the world,” Mark Kepner, managing director and equity trader at Themis Trading LLC, told Bloomberg. “All this is based on what we’re expecting and if that takes longer or doesn’t happen, you’re going to have a lot come out of this market.”
Fueling the optimistic outlook in U.S. markets, President-elect Donald Trump has promised to enact a number of expansionary economic policies, such as a $1 trillion infrastructure spending spree, diminished regulation on industry like the financial sector and corporate tax cuts to encourage growth.
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