Has the US market lost its shine or just its cool?

For years, US markets have been the poster child of global investing - sleek, dominant, and reliably on the up. But suddenly, money is flowing out. Investors across Europe and Asia are pulling billions from funds tied to the US, and not in a slow drift either. This looks more like a sprint for the exits.

So what’s going on? Is this a sign that America’s economic glow is starting to fade, or are we simply witnessing a knee-jerk reaction to another round of political fireworks out of Washington? 

Trump’s return to the White House and his sweeping new tariffs have clearly spooked global capital. But are investors overreacting, or finally rethinking their decade-long love affair with US markets?

Investors leaving US markets: Mood shift or something deeper?

Between December and April, global equity funds excluding the US saw an eye-catching $2.5 billion in inflows. 

That’s not just a rebound, it’s a record-breaking reversal after three years of steady outflows. And notably, most of that money came in just the last three months. For investors, it seems, something snapped.

What triggered it? 

Trump’s tariffs weren’t just bold - they were unexpected, sweeping, and fast-moving. Markets hate surprises, and this one raised eyebrows across boardrooms and trading floors alike. The fear isn’t just about strained global trade; it’s that the US, once the steady centre of the investing universe, is starting to look politically unpredictable. That kind of unpredictability makes capital nervous, but let’s not pretend this is only about politics.

Global investment reallocation: US cool-off overdue?

For much of the past decade, investors have been piling into the US - and why wouldn’t they? The S&P 500 outperformed nearly every other major index, powered by tech giants and a seemingly endless bull run. By the time 2024 rolled around, many global portfolios were heavily overweight the US, sometimes without even meaning to be. 

Index-tracking funds like the MSCI World were doing the heavy lifting, and with the US making up more than 70% of them, diversification was more illusion than reality.

In that context, this recent shift might not be panic. It might just be overdue.

After all, if your portfolio is stuffed with US equities, particularly high-flying tech names like Tesla and Nvidia, and those names are wobbling, some rebalancing is just good sense. Add in trade tensions, political whiplash, and lofty valuations, and it’s no surprise that investors are starting to look elsewhere. Europe, Asia, and emerging markets are back on the radar, not because they’re suddenly outperforming, but because they don’t carry the same baggage.

While others retreat, some see an opportunity

Interestingly, while many are heading for the door, some, like Europe’s private equity powerhouse EQT,  are leaning in. Their founder, Conni Jonsson, has suggested now might be the perfect time to expand in the US, while others are too spooked to compete. Contrarian? Absolutely. But it’s also a reminder that what feels like a mass exodus to some can look like a bargain hunt to others.

EQT’s thinking is strategic. If others are retreating, valuations may drop, acquisition targets become more accessible, and a firm with long-term vision can quietly build strength while the rest of the market is fretting. It’s not a bet that the US is problem-free - far from it. 

It’s a bet that the current wave of fear might be overdone.

So, what’s really going on?

In the end, this isn’t about the US collapsing, nor is it a full-scale global reordering - at least not yet. But it does hint at a turning point. For years, the US was the default choice for capital. Now, it’s being questioned - not abandoned, but scrutinised in ways it hasn’t been for a long time.

Whether this is a temporary cooling-off or a lasting shift depends on what happens next. If Trump’s policies continue to unsettle markets or if institutional investors keep reassessing their exposure to US risk, we may well be watching the start of a more balanced global investing era - not an exit from the US but an end to its automatic dominance.

So, has the American market lost its shine or just its cool? 

According to analysts, it’s mostly the latter for now. But if investor nerves turn into long-term reallocation, that shine might take a little longer to regain.

S&P 500 technical insights

At the time of writing the S&P 500 has seen a significant retreat. A downside bias is evident on the daily chart though volume bars show almost even sellside and buyside pressures - hinting at potential price consolidation. Should the S&P 500 see an uptick, prices could encounter resistance at the $5,980 and $6,144 levels. On the other hand, should the S&P 500 see further slump, prices could be held at the $5,790 and $5,550 support levels. 

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