Global stocks diverge as U.S. outpaces rest of world in 2025 rally

While U.S. equities continue to set records, a recent commentary highlighted that markets outside the U.S. are underperforming even on a strength basis. The MSCI AC World ex USA Index—which tracks developed and emerging-market stocks outside the U.S.—has lagged substantially despite the bullish backdrop. This divergence raises concerns about global breadth and potential fragility in risk appetite if U.S. cues fade. Portfolio strategists suggest that U.S. out-performance may limit global upside and increase sensitivity to dollar strength and export-related risks.