According to Bloomberg, market experts believe that the U.S. capital markets will continue to dominate globally in 2025. U.S. large-cap stocks are approaching their best performance year since 1997. Although interest rates remain high, corporate borrowing in the U.S. is still easy.
In a week with shortened holidays, the U.S. market performed excellently. Investors reacted positively after Trump announced plans to appoint a Treasury Secretary. Despite tariff threats causing market volatility, the S&P 500 index rose by 1.1%, and the Cboe volatility index fell to a four-month low.
The U.S. economic growth has outpaced other developed countries since the pandemic, and investor optimism surrounding Trump's policies has driven the U.S. market. Despite the widening valuation gap of U.S. assets, capital inflows are accelerating, while Europe and emerging markets are experiencing capital outflows.
Although global central banks are entering a loose monetary policy mode again, Invesco expects Europe to outperform the U.S. due to lower valuations and a higher weight of cyclical industries. However, the U.S. market has beaten other global markets nearly every year for the past 15 years.
