Surveyed international investors are betting on European equities to beat out US stocks, JPMorgan said.
The “sell America” trade has picked up steam amid policy, tariffs, and deficit fears.
“Sell America” sentiment is growing among international investors, even as Wall Street forecasters see US markets bound to push past the worst-case scenarios.
Investors from 45 countries surveyed at the JPMorgan Global Markets Conference this month revealed a bullish lean toward Europe, with 36% anticipating European equities to be the best-performing asset in 2025.
That’s compared to 17% who are betting on US stocks to dominate.
“There were mixed views on the outlook for the US economy, even if recession is no longer the base case, and investor sentiment was not as positive on growth as risk market trading suggests,” a team of JPMorgan analysts wrote last week.
The report, involving 700 investors from 45 countries, adds to other signs indicating that global investors have turned cautious on US markets after years of outperformance.
While US equities have drawn heavy foreign investor flows as the market rallied in the last few years, high valuations, AI disruptions, and massive policy and data jitters have shaken faith in “US exceptionalism.”
Meanwhile, new tailwinds are emerging for the European market, and investors have flocked to the region’s stock market. The Stoxx Europe 600 is up 7% for the year, while the S&P 500 is down about 1%.
However, though the stark difference in performance between the two markets may boost pro-European arguments, several Wall Street forecasters have cautioned against dumping US assets.
Morgan Stanley recently projected that American dominance will remain intact through at least 2026, as near-term volatility gives way to improved earnings sentiment, continued AI gains, and accommodating policy boosts. In its view, slowing growth will not trigger a recession.
Goldman Sachs, meanwhile, suggested that US mega-caps will outperform again this year — the so-called Magnificent Seven stocks have been the S&P 500’s main growth engine since 2023, and are trading at discounted valuations that investors will lean into, the bank said.
For now, uncertain will remain until the market gets more clarity on everything from interest rates, recession odds, trade deals, and geopolitical developments. JPMorgan offered some takeaways from the conference on key issues:
Recession: Odds of a US downturn now stand at 40%, but GDP damage is already done. Conference speakers cited that US tariffs will dent business investment and consumption. JPMorgan expects the 10-year Treasury yield to end 2025 at 4.35%.
Trade negotiations mean more uncertainty: Easing tensions with China may have uplifted US investors’ spirits, but a deal with the European Union looks contentious, JPMorgan said. Risk of retaliation is high if negotiations don’t conclude favorably. That risk was amplified on Friday when Trump posted on Truth Social that he was recommending a 50% tariff on the EU starting June 1.
Expect a longer bond sell-off: Foreign dumping of US debt should continue as inflation, attacks against central bank independence, and policy turmoil erode the Treasury market’s safe haven appeal.
As sovereign wealth funds and reserve managers rethink Treasury holdings, gold stands to benefit, JPMorgan said.
“A potential shift of just 0.5% of foreign US assets to gold could yield 18% annual returns, taking gold prices toward $6,000 by early 2029.”
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