US Stocks Shine in 2025, International Markets Outperform
In 2025, US stocks experienced significant gains, yet global markets demonstrated even greater performance. The MSCI All Country World ex-USA index surged by 29.2%, surpassing the S&P 500’s increase of 16.39%. Several factors contributed to this international outperformance, particularly the growing impact of artificial intelligence in Asia.
Key Market Performance in 2025
Asian markets thrived due to the AI boom, with key countries seeing substantial increases. South Korea’s Kospi index soared nearly 76%—its best performance since 1999. Japan’s Nikkei 225 rose by 26%, primarily driven by tech stocks. Notably, Kioxia’s shares skyrocketed 536% during the same period.
- South Korea’s Kospi: +76%
- Japan’s Nikkei 225: +26%
- Kioxia (memory chip maker): +536%
- Samsung (tech giant): +130%
- Taiwan Semiconductor Manufacturing Company (TSMC): +46.54%
- Alibaba: +75.81%
European Market Gains
European stocks also benefitted from various economic improvements. The German government’s increased defense spending led to remarkable gains in the defense sector. Rheinmetall, a German manufacturer, gained 154% in 2025.
- Spain’s IBEX 35: +49%
- Italy’s FTSE MIB: +32%
- Germany’s DAX: +23%
- Greece’s ATHEX Composite: +44%
- Poland’s WIG index: +47%
The UK’s FTSE 100 index saw an increase of 21.51% and reached a record high of over 10,000 points early in 2026. Investors noted that a weaker US dollar significantly impacted international market performance. The US dollar index fell approximately 9.4% in 2025, its worst decline since 2017.
International Investment Outlook
The market dynamics of 2025 indicate a shift in investment strategies. With higher valuations in the US compared to international markets, investors were incentivized to diversify portfolios globally. Michael Reynolds of Glenmede noted, “A lot of things went right for international stocks in 2025.”
Furthermore, David Russell of TradeStation highlighted that countries like Poland offered a unique blend of growth and value amidst a favorable dollar environment. Greece, having recovered from a prolonged debt crisis, also demonstrated a notable comeback.
Future Projections
Looking ahead, analysts suggest the performance of foreign stocks will depend heavily on the trajectory of the dollar. If the dollar continues to weaken, international equities may enjoy sustained interest.
Despite the remarkable outperformance of global markets, some analysts maintain a preference for US stocks. Sameer Samana from Wells Fargo expressed a belief that the dollar will stabilize, which could diminish the advantage for emerging markets.
In conclusion, 2025 marked a year of exceptional performance for international markets, driven by strong fundamentals in various regions. As investors adapt to changing economic conditions, global diversification may prove essential for long-term success.
