International stocks surge as markets recalibrate the U.S. AI story

Asset prices are signaling a broader reassessment of where growth and earnings momentum will come from next, with international benchmarks — led by emerging markets — mounting a sustained advance since 2023. The iShares MSCI Emerging Markets ETF (EEM) has rallied sharply from 2023 lows and is trading in the low $60s, approaching a technical resistance zone near the mid‑$60s that has capped prior rallies. Ratio analysis underscores the move: the S&P 500’s decade‑long dominance versus emerging markets and global ex‑U.S. equities has eased as relative strength indicators and long‑term moving averages for the S&P/EEM pairing pull back from multiyear highs. The movement has not been purely market‑technical. A compact set of policy and corporate developments — including public U.S. tariff signals, currency‑policy rhetoric, Asia‑Pacific trading reversals and headlines around central‑bank leadership — have punctuated the window, amplifying flows into international funds. Asia‑Pacific sessions saw sharp country‑level moves that fed the narrative: India registered outsized gains after tariff‑related headlines that repositioned demand expectations for exporters, while South Korea’s market staged dramatic intraday recoveries. Currency swings — notably an initial dollar decline of roughly 1% from recent highs and subsequent intraday rebounds tied to Fed‑nomination and legal‑inquiry reports — have both boosted foreign‑listed returns in dollar terms and prompted large managers to expand hedging programs. Commodity and alternative markets have moved in tandem: gold and silver retraced losses with strong percentage gains in the period, while crypto outflows and concentrated liquidations added to episodic volatility and thinned depth in certain venues. Corporate news added offsetting forces: consolidation and prospective mega‑valuations in parts of the AI ecosystem supported tech re‑ratings even as weak guidance from some cloud and software firms produced abrupt market value drawdowns. Fixed‑income desks have also reacted, trimming duration and increasing allocations to shorter‑dated or inflation‑linked instruments amid greater policy uncertainty and repricing of real yields. Portfolio managers describe the current state as a market‑driven experiment: many are modestly re‑weighting into overseas equities as a tactical hedge while keeping U.S. exposure intact, treating recent price action as an information signal rather than proof of a durable regime change. The path forward will hinge on whether technical floors for U.S. leadership hold, incoming macro and earnings data confirm the narrative, and whether policy rhetoric is followed by concrete measures that alter trade, currency and growth dynamics.