Indiana Trust Wealth Management
Investment Advisory Services
by Clayton T. Bill, CFA
Vice President, Director of Investment Advisory Services

  • The U.S. equity market, represented by the S&P 500 index, rose 1.1% this week.
  • European markets have benefitted from the global rotation away from tech stocks to value-oriented sectors such as Resources and Utilities.

The MSCI World Ex-US index represents almost the entirety of developed countries’ stock markets outside the United States. That index almost doubled the 17% return of the US market’s S&P 500 index in 2025. US investors could be forgiven for concluding that this outperformance by foreign markets was an anomaly, given the US market’s clobbering of international markets over the last decade.

As the calendar has turned to 2026, it may come as a surprise that the MSCI World Ex-US is off to its best year-to-date start versus the S&P 500 since 1995.  The rotation to foreign market outperformance appears to have legs.

Returns have been particularly strong in Western Europe. The region’s stock market, as tracked by the STOXX 600 index, is trading at an all-time high. Investor attention has been drawn by statements from European governments that reflect the intention to invest in its infrastructure and defense. This has been a closely watched theme since the beginning of 2025.

This year, there is more to the story. The rotation away from so-called “AI impacted” industries has been to the benefit of European markets relative to the US. For example, Technology names only represent 8% of the STOXX 600 versus a rather hefty 33% weight for the S&P 500.

Heretofore unloved value-oriented sectors such as Resources, Health Care, and Chemicals have performed admirably in 2026.  The STOXX 600’s Resources group, which includes mining giants such as Rio Tinto and Glencore, is up almost 19% this year.


Source: Bespoke Investment Group, February 18, 2026

The returns in the chart above are in local currency terms, to boot. The dollar has weakened in 2026, providing an extra currency boost to returns for US investors. If global asset managers continue rebalancing toward non-US markets, these trends may continue, given the deliberate nature of institutional decision making.

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