Huileng Tan,Nora Redmond
5 min read
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Europe and Japan are back on investors' radar amid renewed economic momentum.
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Investor focus is shifting back to Europe and Japan, driven by fiscal stimulus and signs of economic revival.
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This shift comes as market dynamics shift in Trump's second term, with a broad sell-off in US assets.
This is the "Sell America" trade in one chart.
President Donald Trump's policy moves are shaking up global markets and making US assets less appealing relative to their global peers.
The stock market offers a clear example of this. While the US benchmark S&P 500 has shaken off tariff jitters and turned positive for 2025, it's still badly lagging its Asian and European counterparts. This marks an abrupt shift from the US dominance of previous years.
"American equities look expensive relative to historic norms, almost any way you slice them, and some investors seem more wary of holding dollar-denominated assets during Trump's second term," Russ Mould, investment director at investment platform AJ Bell, told Business Insider.
But "Sell America" extends beyond stocks. The US Dollar Index — weighted against a basket of global currencies — is sitting at a multi-year low. US government bonds show a similar trend, as investors lose confidence in them as the ultimate safe haven. Prices have fallen, pushing yields higher.
As a result, investors chasing oversized returns in the US are no longer overlooking Europe and Japan.
While Japan, the world's fourth-largest economy, has been witnessing a comeback in its stock markets since 2023, investors have also recently turned bullish on Europe, where governments have pledged to ramp up spending, particularly in defense.
Investors see the growth expected from the fiscal expansion as early signs of a new dawn in the old continent.
"There is a joke that Europe is a museum. That may have been the case in the past. But it is dramatically shifting from a staid and relatively dull investment landscape to one of the more compelling," Sam Rines, a macro strategist at asset manager WisdomTree, told Business Insider.
The momentum has boosted stock indexes, with the STOXX Europe 600 and Germany's DAX indexes up 8% and 20% higher so far this year, respectively.
The optimism is a stark contrast from the years following the global financial crisis, when several eurozone economies struggled with debt crises.
Rines described the continent as being in the "early innings of a renaissance."
"From bilateral trade breakthroughs to potential de-escalation in US-EU tariff battles, the policy pendulum is swinging from fragmentation toward cooperation," he said.
