Hartnett of Bank of America expects international stocks to outperform U.S. stocks this decade

LootboxPhobia · 2026-02-27T11:09:44+00:00

According to the team led by U.S. bank strategist Michael Hartnett, international stock markets are expected to outperform U.S. stock markets in the second half of the 2020s, mainly due to factors such as excessive fiscal policies, populism, and the impact of artificial intelligence. Although the U.S. still accounts for the majority of the global stock market share, this gap will gradually narrow.

LootboxPhobia

2026-02-27 11:09:44

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Investing.com - According to a team led by U.S. Bank strategist Michael Hartnett, international stock markets are expected to outperform the U.S. stock market in the second half of the 2020s.

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In the latest Flow Show report, these strategists wrote, “New World Order = New World Bull Market,” predicting that after years of U.S. dominance, international markets will gain a larger share. They emphasized that currently, out of the $97 trillion global stock market, 38% is from other regions, while the U.S. accounts for 62%, and this gap is expected to narrow over time.

Hartnett’s team believes that several factors drive the expected rotation, including excessive fiscal stimulus, rising populism, and the “end of the deflationary era.” The strategists also think that the disruptive impact of artificial intelligence on the U.S. economy and stock market could be greater than that on overseas markets.

“Negative impacts of AI disruption on the labor market and/or corporate earnings in the service-dominated U.S. GDP and S&P 500 index are likely to be larger than the effects on manufacturing/resource-intensive macroeconomics and stock indices like EAFE/EM,” the team wrote.

Regarding capital flows, U.S. Bank stated that in the week ending February 25, global equity funds attracted $38.1 billion, cash funds attracted $38 billion, and bond funds attracted $16.8 billion. Gold funds saw inflows of $6.2 billion, and cryptocurrency funds attracted $300 million.

Regionally, U.S. equity funds recorded inflows for the fifth consecutive week, totaling $2.2 billion. European funds experienced their fourth consecutive week of inflows, amounting to $3.2 billion, while emerging markets led with inflows of $15.4 billion. Japan saw inflows of $1.9 billion.

Additionally, the financial sector experienced outflows of $2.2 billion, the largest since April 2025, while Korean equity funds attracted $3.7 billion, bringing the year-to-date inflow to $21 billion—setting a record for the highest annual total ever.

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