Are International Markets Back?

Everybody loves a good comeback story.

After more than a decade of consistent underperformance, global markets have started to stage a powerful reversal. Going back to 2010, large-cap tech giants helped propel US stocks higher while foreign stocks plodded along. Over this timeframe there were only a handful of rolling 1-year periods where international stocks outpaced the US.

However, this trend started to change in 2025 as stocks overseas outpaced the US by a relatively wide margin.

While previous attempts at trend reversals had been short-lived, the shift toward international has continued in a big way so far in 2026. Global markets are having their best start to a year over the US since 1995.

What’s driving the recent shift? There seem to be several forces in play at the moment, all converging together at once:

• US valuations have stretched to roughly 40% above international peers on a price-to-earnings basis, making foreign stocks comparatively attractive. 
• A weaker dollar has further boosted returns for US-based investors in foreign markets as each unit of foreign currency translates into more dollars. 
• Europe is benefiting from aggressive rate cuts and Germany’s largest fiscal spending package in decades. 
• AI enthusiasm has broadened beyond Silicon Valley to other countries, while other sectors have also come back into favor.

For investors, this trend is worth paying attention to – not as a reason to abandon domestic stocks, but as a reminder that diversification remains important. During the long US bull run, a globally diversified portfolio felt unnecessary, creating a constant drag while providing little benefit. However, diversification isn’t meant to maximize returns in any given year, it’s meant to ensure you’re always participating in growth wherever it happens to occur. No single market wins forever, and spreading exposure across various regions means you’re never fully on the wrong side of a cycle.

– The Aspire Wealth Team