As the global economy navigates through dynamic shifts, the year 2026 is poised to present a complex landscape for equity markets worldwide. While a continued upward trajectory is anticipated for international stocks, the dominant performance seen in the US market during previous periods might reassert itself, challenging the outperformance of non-US assets. Investors will need to keenly observe various economic indicators and geopolitical developments to identify optimal growth opportunities.
Looking back at 2025, international equities demonstrated robust growth. The S&P Global Ex-US Broad Market Index (BMI), encompassing over 12,000 non-US securities, achieved an impressive return exceeding 28%. This strong showing underscored the resilience and potential of markets outside the United States. Furthermore, both the S&P Developed Ex-US BMI and the S&P Emerging BMI recorded substantial gains, with increases exceeding 31% and 20% respectively. Such performances highlight a period of widespread global market strength, suggesting underlying economic health in numerous regions.
However, the competitive landscape with US equities remains a critical factor. Historically, the depth, liquidity, and innovation within the US market often provide a robust foundation for growth, even amidst global uncertainties. Corporate earnings, technological advancements, and a stable regulatory environment in the US could contribute to a renewed leadership position for American stocks. For international markets to truly outperform, they would need to demonstrate sustained advantages in growth rates, valuations, or specific sectoral opportunities.
Western European markets, for instance, are identified as potential hotspots. The region could offer compelling investment avenues, particularly within the technology and defense sectors, driven by ongoing innovation and evolving geopolitical dynamics. The healthcare industry, a perennial growth area, along with a potential surge in Initial Public Offerings (IPOs), could further fuel market enthusiasm. These specific sectoral strengths might provide a counterbalance to the broader appeal of US market giants.
A notable aspect for consideration is market valuation. At the close of 2025, the S&P United States BMI's aggregate daily forward price-to-earnings (P/E) ratio stood at 23.15 times. In contrast, the S&P Emerging BMI registered a significantly lower multiple of 15.33 times, according to data from Market Intelligence. This valuation disparity suggests that emerging markets might offer more attractive entry points and greater potential for multiple expansion, assuming a stable or improving economic environment. Investors looking for value could find compelling arguments to allocate capital to these regions.
The global equity markets in 2026 are expected to continue the upward momentum from the previous year, with international stocks poised for growth. Nevertheless, the US market, renowned for its resilience and innovation, might reclaim its position as a frontrunner. Opportunities abound in sectors like technology and healthcare in Western Europe, while the valuation advantage of emerging markets could attract savvy investors seeking long-term gains. The interplay of these factors will define the investment landscape in the coming year, requiring a nuanced and informed approach from market participants.
