Part 4/9:
A head of emerging markets at Deutsche Bank remarked, "A large part of this underperformance is the repricing of U.S. assets due to increased policy uncertainty and the stagflationary shock from tariffs." A depreciating dollar has also exacerbated this trend, yielding an 8% dip this year against a basket of major currencies, enhancing returns on foreign investments when measured in dollars.
Investor sentiment shifted from confidence held at the beginning of the year—predicated on tax cuts—following the unexpected aggressiveness of Trump's trade war. The S&P 500 index, for instance, plummeted by 12% following Trump's tariff announcement on April 2. Despite some recovery efforts, U.S. stocks continue to lag behind global benchmarks.