why are international stocks up now

Why are international stocks up

Short answer: rising foreign equity returns reflect a mix of currency moves, regional earnings momentum, sector leadership outside the U.S., valuation-driven reallocation and large investor flows. This guide answers "why are international stocks up" with measurable indicators, regional case studies, sector themes, risks and monitoring tools so readers can follow the story with sources and practical next steps.

Note: this article is neutral, educational and not investment advice. When we refer to trading platforms or wallets, Bitget is highlighted as a recommended option for users who want access to global equities and Web3 tools.

Executive summary

• Question addressed: why are international stocks up? The recent outperformance of non‑U.S. equities vs the U.S. has several overlapping drivers: a weaker U.S. dollar that amplified returns for dollar‑based investors; AI and semiconductor demand lifting East Asian markets; fiscal and defense stimulus and cyclical rebounds in Europe; attractive starting valuations ex‑U.S. that drew reallocation; and sizable ETF/mutual‑fund flows into international exposures.
• Performance snapshot: as of Dec 31, 2025, multiple outlets reported the MSCI ACWI ex‑USA and many regional indices materially outpaced the S&P 500 for the calendar year 2025 (MSCI ACWI ex‑USA was widely reported up roughly high‑twenties percent YTD in 2025). Sources cited below include CNBC, Barron’s, CNN and Morningstar.
• Market structure note: Barclays (reported via Bloomberg) highlighted that volatility in recent years has concentrated in single large U.S. names even while broad U.S. indices looked calm; that environment encouraged some investors to diversify into international markets where momentum and breadth were stronger (Barclays commentary, Jan 2026).

This article expands each driver, gives regional and sector case studies, lists indicators to watch, and outlines practical ways to gain international exposure (ETF types, country/region funds, ADRs, active strategies) with currency and positioning considerations.

Key market indicators and data

To measure international performance and compare to the U.S., the following indices and metrics are commonly used:

• MSCI ACWI ex‑USA (broad developed + emerging ex‑U.S.)
• MSCI ACWI (global index including the U.S.)
• Regional indices: MSCI EAFE (developed ex‑U.S.), MSCI Emerging Markets, FTSE Europe, Korea KOSPI, Japan TOPIX/Nikkei, Brazil IBOV, Mexico IPC
• Country ETFs and ADR aggregates for market‑level flows
• U.S. benchmark for comparison: S&P 500
• Currency: U.S. Dollar Index (DXY) and bilateral pairs (USD/EUR, USD/JPY, USD/KRW)
• Fund flows: ETF and mutual fund net flows into ex‑U.S. products
• Earnings and revisions: aggregate EPS growth and upgrade/downgrade breadth by region
• Technical breadth: number of advancing stocks, new highs, relative strength vs S&P 500

Illustrative, widely‑reported figures (for context):

• As of Dec 31, 2025, multiple outlets reported MSCI ACWI ex‑USA rose about +29% YTD in 2025, outpacing the S&P 500 for the same period (sources: Barron’s Dec 30, 2025; CNN Jan 4, 2026; CNBC Dec 31, 2025).
• Currency effect: over 2025 the U.S. dollar index (DXY) was reported to have weakened materially versus a year earlier; several analyses attribute a significant portion of U.S. investor returns in foreign stocks to dollar weakness (see Fidelity, Dec 9, 2025; Capital Group, Oct 1, 2025).
• Flows: end‑of‑year fund flow summaries showed sizable net inflows to international equity ETFs and a rotation away from a handful of concentrated U.S. mega‑caps (Business Insider Mar 12, 2025; Morningstar Aug 20, 2025).

(Reporting dates noted above are tied to cited sources; consult live data providers such as MSCI, LSEG or Bloomberg for real‑time numbers.)

Principal drivers of international outperformance

Currency effects (weaker U.S. dollar)

One of the most straightforward explanations for "why are international stocks up" is currency. For a U.S. investor, returns from foreign equities equal local stock returns plus the currency return when translated back to dollars. A falling U.S. dollar amplifies foreign local gains in dollar terms.

• Mechanism: if local equities are flat in local currency but that currency appreciates against the dollar, U.S. investors see positive dollar returns. Conversely, a strengthening dollar erodes foreign gains.
• 2025 context: several research pieces and asset managers cited dollar weakness in 2025 as an important tailwind for ex‑U.S. returns (Fidelity, Dec 9, 2025; Capital Group, Oct 1, 2025). Currency accounted for a meaningful share of the outperformance that year.

Practical implication: monitor DXY and bilateral currency moves; consider hedged vs unhedged exposures depending on your view of future dollar direction.

Regional growth and sectoral momentum (Asia, Europe, Latin America)

Different regions led for distinct reasons:

• East Asia (South Korea, Taiwan, Japan): strong demand for AI chips, servers and hardware boosted semiconductor ecosystems and major manufacturers (TSMC, Samsung and related supply chains were frequently cited as drivers in 2025). Asian markets with large hardware and capital‑goods footprints benefited from cyclical capex tied to AI and data center expansion (Capital Group Oct 1, 2025; Morningstar Aug 20, 2025).
• Japan: corporate governance reforms, valuation discounts relative to global peers and a better earnings outlook helped Japanese equities perform. Policy shifts and buyback activity gave local momentum.
• Europe: fiscal and defense-related spending, a late cyclical recovery in industrials and energy/commodity exposure aided certain European markets (Wall Street Journal, Dec 23, 2025). Defensive rotations into banks and industrials added breadth.
• Latin America: many countries began 2025 with low starting valuations and recovered due to commodity tailwinds, better macro data and currency appreciation, producing outsized percentage returns in some markets (Morningstar Aug 20, 2025).

These regional drivers answer part of why are international stocks up: different pockets of the world had structural or cyclical catalysts at the same time.

Valuation and opportunity‑seeking

After long stretches of U.S. dominance, non‑U.S. equities traded at lower forward P/E multiples. That valuation gap attracted reallocation from investors seeking cheaper sources of earnings growth or yield.

• Valuation mechanics: when U.S. growth stocks trade at premium multiples, rebalancing and tactical allocation strategies hunt for cheaper expected returns overseas.
• Evidence: numerous asset managers and research desks cited valuation gaps in late 2024–2025 as a motive for adding ex‑U.S. exposure (Fidelity Dec 9, 2025; Hartford Funds analysis). This buying pressure can itself lift prices and narrow discounts.

Earnings and fundamentals

Beyond multiples, corporate profits outside the U.S. improved in parts of 2025:

• Upgrades: earnings‑revision breadth (more upward than downward revisions) was stronger in several non‑U.S. regions during key quarters of 2025, helping justify price gains (Capital Group Oct 1, 2025).
• Sector composition: international markets have higher weightings in cyclicals, banks, industrials and energy relative to the U.S. index mix. When those sectors rally (on capex, commodity moves, or defense spending), ex‑U.S. indices benefit.

Policy and fiscal catalysts

Policy differences across regions matter:

• Central bank divergence: differences in monetary policy timing and terminal rates can affect currency flows and relative equity attractiveness.
• Fiscal and defense spending: several European economies increased defense and infrastructure allocations in 2025, supporting specific sectors (WSJ Dec 23, 2025).
• Targeted stimulus: Chinese policy shifts and support measures at times provided positive momentum for Chinese equities and related sectors in Asia (CNBC May 28, 2025; Business Insider Mar 12, 2025).

Market flows and investor positioning

Large-scale reallocations from passive and active institutional investors change market dynamics:

• ETF flows: large inflows into ex‑U.S. ETFs mechanically raise prices for included securities and signal investor appetite for international exposure (Business Insider Mar 12, 2025).
• Reweighting: some institutional investors reduced U.S. concentration and rebalanced toward diversified global exposures.
• Retail behavior: Barclays (via Bloomberg, Jan 2026) observed retail buying behavior in U.S. single names and a lottery mentality; in contrast, some institutional flows favored international diversification, enhancing relative performance abroad.

Technical and momentum factors

Technical patterns can accelerate rallies once a leadership theme appears:

• Momentum: long relative strength trends prompt systematic strategies and momentum funds to add to winners.
• Breadth: when more stocks participate (improving breadth), the rally feels more sustainable compared with a narrow, single‑stock‑led advance.
• Breakouts and moving averages: breaks above key resistance and above longer moving averages attract trend followers, increasing buying pressure.

These technical dynamics help explain why are international stocks up beyond fundamental reasons.

Regional case studies and examples

East Asia (South Korea, Taiwan, Japan, China)

• South Korea & Taiwan: semiconductor fabs and equipment makers were central beneficiaries of AI hardware demand. In 2025, these markets recorded significant gains tied to chip cycles and export orders (Capital Group Oct 1, 2025).
• Japan: corporate reforms, buybacks and relatively cheaper valuations supported performance; exporters benefited from a weaker yen in local‑currency terms but currency‑translated returns for U.S. investors were helped by a softer dollar.
• China: policy easing and targeted stimulus in certain sectors led to episodic rallies; however China remained a higher‑variance market with distinct regulatory and macro risks (CNBC May 28, 2025).

Europe

• Europe saw strength in industrials, defense contractors and banks in parts of 2025 as fiscal tailwinds and capex improved.
• Germany benefited from selective recovery signals and restructuring efforts; the euro’s moves versus the dollar also influenced dollar‑based returns.

Latin America

• Countries such as Brazil, Mexico and Colombia saw rallies off low bases in 2025. Commodity prices, currency appreciation versus the dollar and improving investor sentiment amplified local returns.

Emerging markets vs developed ex‑U.S.

• Emerging markets outperformance was often concentrated in commodity exporters and Asian cyclical plays, while developed ex‑U.S. gains came from Japan, parts of Europe and markets with favorable corporate actions.
• Risk profile: emerging markets remain more volatile, with higher sensitivity to global liquidity and commodity cycles.

Sectors and themes lifting international stocks

AI, semiconductors and hardware supply chain

A major theme driving non‑U.S. gains was global AI capex. Key points:

• Non‑U.S. chipmakers, equipment suppliers and component manufacturers captured revenue growth from global data center and server investment.
• East Asian markets, with concentrated semiconductor supply chains, benefited disproportionately.

Financials and banks

• Banks in several regions rallied on improving net interest margins and stronger loan demand where local policy rates and balance‑sheet dynamics permitted.
• Financials often trade at cyclical multiples and can rebound strongly in a recovery.

Defense, industrials and commodity sectors

• Defense and industrials benefited where fiscal spending increased.
• Commodity exporters and materials companies gained from higher metal/energy prices in periods where those markets tightened.

Historical context and regime considerations

Is the move a temporary rotation or a structural regime change? Analysts debate whether the U.S. growth bias has permanently shifted. Considerations:

• Temporary rotation: long cycles of sector leadership rotate back to value/cyclicals periodically. A durable shift requires sustained earnings outperformance and currency regimes that favor non‑U.S. returns.
• Structural change: persistent globalization of AI hardware demand, diversification of supply chains, and multipolar capital flows could suggest a longer‑lasting reweighting.

Historical precedents show both rotation and regime change are possible; monitoring earnings, flows and currency is essential to distinguish scenarios.

Implications for investors

Portfolio diversification and allocation decisions

• Strategic vs tactical: maintain long‑term allocations aligned with risk tolerance; use tactical tilts for short‑to‑medium term themes.
• Rebalancing: valuation gaps and correlation breakdowns warrant periodic review of regional weights.
• Hedged vs unhedged: hedging currency can reduce volatility but also eliminate a potential source of positive return if the dollar falls further.

Ways to gain exposure

Common instruments include:

• Broad ex‑U.S. ETFs (e.g., MSCI ex‑US index funds) — efficient for broad exposure.
• Regional ETFs (Asia ex‑Japan, Europe, Latin America) — target regional drivers.
• Country ETFs and single‑country funds — higher concentration and risk.
• ADRs and US‑listed foreign companies — direct exposure with U.S. trading convenience.
• Active international funds — may add value through stock selection and risk management.
• Direct purchases on global exchanges via a platform offering international equities — for experienced investors.

When choosing a platform, Bitget is a recommended exchange for users who want a consolidated global market experience and integrated Web3 wallet support (Bitget Wallet) for cross‑asset workflows.

Currency hedging considerations

• Hedging trade‑offs: hedging reduces currency volatility but costs carry (hedge premiums). Decide based on horizon: short‑term traders often hedge, long‑term investors may accept currency exposure.
• Tools: currency‑hedged ETFs, forward contracts and overlay strategies are common hedging mechanisms.

Risks and countervailing factors

Currency reversals

A sudden dollar rebound can quickly erase dollar‑based gains from foreign equities. Currency is among the fastest reversal risks.

Policy and geopolitical risk

Changes in trade policy, sanctions, or regulatory shifts can hurt regional markets. Investors should monitor policy announcements and country‑specific risk indicators.

Valuation mean reversion and concentrated rallies

Outperformance concentrated in a few sectors or stocks can be vulnerable to sharp corrections if sentiment changes.

Liquidity and market structure

Emerging markets often have lower liquidity and higher transaction costs; large flows can create more price impact than in developed U.S. markets.

Market indicators and how to monitor the theme

Valuable indicators that signal continuation or reversal of the international‑outperformance theme:

• Dollar Index (DXY): primary signal for currency tailwind/headwind
• MSCI ACWI ex‑USA and MSCI Emerging Markets returns and relative performance vs S&P 500
• Earnings revisions: breadth of upward vs downward EPS revisions by region
• ETF flows: weekly/monthly net flows into ex‑U.S. ETFs
• Commodity indices: swings in oil, metals and agricultural prices that affect commodity exporters
• Technical breadth: percent of stocks making new highs, advancing issues versus decliners
• Interest rate differentials and local central bank policy guidance

Set alerts or a dashboard to track these metrics for timely signals.

Outlook and scenarios

Three concise scenarios illustrate possible paths and triggers:

• Bull case: durable dollar weakness + sustained global earnings growth in cyclicals and AI hardware => international outperformance continues. Triggers: prolonged currency weakness, broad EPS upgrades ex‑U.S., continued tech capex.
• Base case: partial rotation that persists while U.S. growth leadership remains important; gains moderate as valuation gaps narrow. Triggers: mixed earnings, dollar stabilizes, flows moderate.
• Bear case: dollar rebounds, U.S. megacap dispersion normalizes, and concentrated reversals occur in non‑U.S. leaders => international gains reverse. Triggers: faster U.S. rate cuts priced out, geopolitical shocks to major exporting countries, sudden commodity shocks.

Data sources, notable 2025 examples, and empirical evidence

• As of Dec 31, 2025, reported performance: several outlets (Barron’s Dec 30, 2025; CNN Jan 4, 2026; CNBC Dec 31, 2025) noted MSCI ACWI ex‑USA and many regional indices outperformed the S&P 500 in 2025 (MSCI ACWI ex‑USA cited near +29% YTD by multiple reports).
• Currency: numerous end‑of‑year analyses (Fidelity Dec 9, 2025; Capital Group Oct 1, 2025) pointed to dollar weakness as a material contributor to dollar‑based returns for U.S. investors in 2025.
• Sector leaders: semiconductor and hardware names in South Korea and Taiwan, along with select Japanese exporters and European industrials, were repeatedly named among 2025 winners (Capital Group Oct 1, 2025; Morningstar Aug 20, 2025).
• Market structure/volatility: Barclays (reported via Bloomberg, Jan 2026) emphasized concentrated single‑stock volatility in the U.S. that contrasted with broader international participation — a structural observation that influenced flow decisions.

All figures vary by index, methodology and currency treatment. For up‑to‑date quantification, consult MSCI, LSEG/FTSE, or your preferred market data provider.

See also

• Global equity indices and definitions (MSCI, FTSE)
• Currency effects on returns (currency translation mechanics)
• International ETF types: hedged vs unhedged
• Equity valuation metrics and regional comparisons
• Country risk assessment frameworks

References and further reading (selected)

• As of Jan 4, 2026, CNN: "US stocks had a remarkable 2025. But international markets did much better." (reporting year‑end performance)
• As of Dec 30, 2025, Barron’s: "International Stocks Crushed the S&P 500…" (year‑end recap)
• As of May 28, 2025, CNBC: "The rest of the world is trouncing the U.S. stock market…" (regional drivers)
• As of Dec 9, 2025, Fidelity: "2026 international stock outlook" (currency and valuation analysis)
• As of Oct 1, 2025, Capital Group: "5 charts on what’s powering international stocks" (visual drivers and sector detail)
• As of Dec 23, 2025, Wall Street Journal: "World Stocks Poised to End Year Way Ahead…" (regional and fiscal context)
• As of Dec 31, 2025, CNBC year‑end roundup: "Global stock markets' winners and losers of 2025" (index winners)
• As of Mar 12, 2025, Business Insider: "International stocks are surging — 4 ways to buy in" (exposure options)
• As of Aug 20, 2025, Morningstar: "Why 2025 Is the Year to Invest in International Stocks" (valuation and flows)
• As of Jan 2026, Barclays (reported via Bloomberg): analysis of single‑stock volatility concentration in U.S. markets and implications for diversification

Further reading and practical next steps

• Track the DXY and MSCI ACWI ex‑USA to follow the core theme of currency + regional returns.
• If you want consolidated access to global markets and integrated Web3 tools, explore Bitget’s platform for global equities and Bitget Wallet for secure cross‑asset workflows.
• For hands‑on monitoring, set up a dashboard that combines index performance, currency moves, earnings revisions and ETF flows.

Explore more on the Bitget platform to access international ETFs, country exposures and Web3 wallet features to support your research and execution.

Editorial note on sources and timing

• Reporting dates are noted next to citations where relevant to provide up‑to‑date context. Performance numbers and index returns cited above reflect widely reported 2025 year‑end summaries; exact figures vary by index provider and currency treatment. For live verification, consult MSCI, LSEG/FTSE or your institutional data feed.
• Barclays’ market‑structure observations were reported via Bloomberg in Jan 2026; the bank emphasized concentrated single‑stock volatility in U.S. equities and recommended strategies to manage dispersion risk.

Actionable checklist (summary)

• Watch: DXY, MSCI ACWI ex‑USA, regional earnings revisions, ETF flows, commodity prices
• Consider: hedged vs unhedged exposure depending on horizon
• Tools: broad ex‑U.S. ETFs, regional ETFs, country funds, ADRs, active funds
• Platform: use Bitget for consolidated access and Bitget Wallet for secure asset management

Further explore the drivers above to answer "why are international stocks up" for your portfolio timeframe and risk profile. For platform options and global market access, check Bitget’s product suite and Bitget Wallet features.