Name: International markets likely to outperform U.S. equities again in 2026
Uploaded: 2025-12-26T05:08:51.626Z
Duration: 4 min 17 s
Description: Rupert Mitchell, Author of Blind Squirrel Macro, says international markets are poised to outperform U.S. equities next year, particularly with the possibility of a weaker dollar in emerging markets. He also discusses the challenges facing the Bank of Japan, and the possible outcomes of the US-China trade tensions.

Rupert Mitchell, Author of Blind Squirrel Macro, says international markets are poised to outperform U.S. equities next year, particularly with the possibility of a weaker dollar in emerging markets. He also discusses the challenges facing the Bank of Japan, and the possible outcomes of the US-China trade tensions.

Wall Street

Market experts anticipate that international equities, especially in emerging markets and Asia, will outperform U.S. stocks in 2026, largely due to expectations of a weaker dollar. Sectors such as Asian technology and Japanese banks are highlighted as areas of interest, with Indonesia noted as a particularly promising market.

On the trade front, the outlook suggests that India is more likely to reach a trade agreement with the European Union than with the United States in the near future. The period of heightened trade war tensions between the U.S., China, and India appears to be easing, with ongoing coordination expected but no comprehensive deals imminent.

International markets likely to outperform U.S. equities again in 2026

Well listen actually I think all of the action in equities I suspect much of the action in equities this coming year is going to be the excitement is going to be outside of the US. I'm certainly feeling that we're looking at a weaker dollar again in the year ahead like last year and I think that international markets are likely to once again outperform US equities particularly if we get that weaker dollar in emerging markets. We've seen tech stocks in in Asia correct about 15 percent from their highs in September. I could see them coming back but I've got a sort of bias towards sort of lower beta you know high dividend yield lower valuation plays in this neck of the woods. I think that it could be a very interesting year for Indonesia. I think there's way too much bearishness around the rupee but you know I'm looking for another year of international outperformance. How do you look at the BOJ's situation keeping in mind you've got this Tokyo inflation that's come out just a couple of well one hour less than one hour ago. It's a leading indicator so it's not entirely that important but given the very little room that the BOJ and you know Sanae Takahashi have in that relationship what happens next with not just the the Japanese bonds the the rate hikes and of course the Nikkei. Well I mean they've got a they've got a tough needle for thread. I actually like Japanese equities especially the banks with this yield curve shape that we've got right now and I like I like some of the the value in small mid-cap plays up there in Tokyo. I mean the central bank and the government have a have a needle to thread in terms of maintaining confidence in the JGB market but fundamentally you know if you look on a sort of PPP basis the Japanese yen is still a very cheap currency. I'm not as worried as some of the consensus views around further yen weakness that are out there. Right I want to just get a sense from you also because you've been speaking about this for quite some time. The U.S.-China trade war and I don't know how you factored in India into that but feel free to. The bottom line is that these are the two countries that have stood tall and strong against the U.S. and it's difficult to to kind of put a number to or a timeline to when we'll have a deal and I understand that but do you see the potential of no deal with both these countries or at least one of them that the U.S. and China just reach a stalemate remain there. They don't have a proper deal but they have some coordination happening as we are seeing right now and the same with India. What do you see happening with that? I really think the worst of the head the worst of the trade war headlines are behind us Amitaj. I really do and you know I think India is more likely to sign a trade deal with the EU this year than is to sign a fully fleshed out trade deal with the U.S. So you know ultimately the tough guy approach to trade negotiations were tried at the beginning of this year. It didn't work very well and I'm not sure that the U.S. I'm not sure that the U.S. administration really wants to play fast and loose with stability of financial assets which comes with these nasty trade war headlines. So I think bottom line is I don't think we're going to spend much of this year talking about you know negative trade war headlines. I'm sorry just so that I'm clear. Did you just suggest that it's possible that India and the U.S. don't have a trade deal in 2026 but India and you do. Well I think they can have a bunch of frameworks. They can have a bunch of warm words between Modi and the Trump administration. But you know a fully fledged you know trade trade deal right. A proper treaty takes a long time to put together. And you know the one with the EU has been working. They've been working on that for decades.

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