Wall Street Takes the Lead Again

Investors have been focused on Asia and Europe in recent months. However, the war in Iran has placed Wall Street back at the center of the global stage.

Last year, Donald Trump's erratic policies prompted investors to diversify and favor other geographical regions. This shift followed several years of strong performance from Wall Street, which had pushed valuations to historically high levels and given the United States an overwhelming weight in global indices (nearly 75% of the MSCI World index at its peak).

In 2024, the S&P 500 rose by 16%, marking its third consecutive year of double-digit gains. However, the rest of the world performed even better. Consequently, in 2025, the US index posted the most significant underperformance relative to the MSCI World since 2009.

This trend continued into early 2026, as investors anticipated robust growth prospects in Europe and Asia. Simultaneously, fears of AI-related disruption penalized US indices, which are more heavily weighted toward tech stocks. Concerns regarding private credit also weighed on financial stocks more heavily than in Europe.

The United States: Distant from the Conflict

However, the war in Iran has reshuffled the pack. Europe and Asia are regions that are the most impacted by the consequences of the conflict, as they import the bulk of their gas and oil requirements from there. In contrast, the United States is a net exporter of oil and gas. Investors also remember the energy crisis Europe faced in 2022 following Russia's invasion of Ukraine.

They anticipate that governments will once again have to implement measures to support their economies, which will strain public finances. This is reflected first by a very sharp rise in interest rates, but also by the relative underperformance of European defense stocks. While the sector should theoretically benefit from the current context, questions are now being raised about the ability of states to finance military spending.

As the end of Q1 approaches, most Asian and European indices maintain a slight lead over Wall Street, although the gap narrowed significantly in March. The Stoxx 600 has lost 9% since the beginning of the month, while the S&P 500 has limited its losses to 4%.