Macroscope | US exceptionalism will continue for as long as economies in China and Europe lag behind
- China’s coronavirus crisis and Europe’s industrial downturn leave the way clear for the US to lead global growth
- America’s buoyant markets are well supported, not least by the good run so far of Donald Trump, their preferred candidate in the White House race
This was the year that America’s outperformance in the global economy and financial markets was supposed to come to an end. As growth picked up, the gap between the pace of expansion in the US and the rest of the world was meant to narrow. Emerging markets and Europe were expected to gain momentum, attracting greater capital inflows because of cheaper valuations.
Yet, six weeks into 2020, American exceptionalism has become even more pronounced.
Since the beginning of this year, the benchmark S&P 500 equity index has risen almost 4.6 per cent, and currently stands at a fresh record high. A gauge of global stocks excluding US shares, by contrast, is barely in positive territory.
US equity markets continue to benefit significantly from the heavy weighting of technology stocks, the darlings of Wall Street and the main driver of the 11-year bull run in equities. The tech-heavy Nasdaq Composite Index is up 8.4 per cent so far this year, while the New York Stock Exchange’s Fang+ Index, which includes a number of dominant American tech companies, has soared 19 per cent.