- This topic has 3 replies, 4 voices, and was last updated 7 hours, 41 minutes ago by Edward Sheldon.
43% of investors surveyed by CMC Markets expect the US to be the strongest-performing market in 2026, comfortably ahead of the Far East ex-Japan (26%) and Japan (11%). Europe has just 10% backing continental markets to outperform.
Sentiment towards the UK market is looking pretty bruised. On a scale of one to ten, investors rated the UK’s 2026 trading outlook at just 4.3, with 22% feeling extremely pessimistic. Only 3% believe the UK will be the best-performing market next year.
Anyone got any ideas of another stock market index that can beat the US – or any good arb suggestions – i.e. Sell the US against another market…
US markets didn’t perform particularly well in 2025 for example, over the last 12 months the S&P 500 was up by +16.92%. However, the Spanish Ibex 35 posted gains of almost +50.0% in that 12 month period and several smaller European indices did even better. Slovenia’s SBITOP Index is up 5+4.0% over the last year, but even that is knocked into a cocked hat by the gain seen in the Euro Stoxx Banks Index that was was up 75.37$ during the last 12 months.
If we are looking for markets that could outperform in 2026, year to date gains might provide an indicator. Japan’s Nikkei 225 is up by +8.25% in 2026 already and Bulgaria’s SOFIX index has risen by an impressive +18.62 YTD.
And we shouldn’t over look South Korea where the Kospi Composite Index, which rose by some +90.0% in 2025, has added +8.89% since the turn of the year.
Goldman Sachs shared a video this week setting out its view on South Korean equity indices on which they are bullish. The bank cites the countries exposure to AI and silicon chips, improving corporate governance what’s more Goldman flags that some 70% of Korean stocks, are trading below one times book value compared to less than 40.0% for the constituents of Japan’s topic index.
Retail investors in the UK wont find it easy to trade in individual Korean stocks, however, the are ETFs that track South Korean stocks. For example the iShares plc MSCI Korea UCITS ETF (Dist) which trades under the ticker IKOR.L, which rose by 88.90% over the last year and is up 6.55% ytd.
In conclusion then, there are markets that outperformed the US significantly in 2025 and there are several contenders that may repeat the trick in 2026.
The US stock market is in a league of its own.
At the time of writing, 12 out of the top 14 companies (by market cap) are American. Google (GOOG) is the latest tech company to hit the $4 trillion mark.
US Big Techs dominate many aspects of our daily lives, from social networking to shopping to tech gadgets. Their monopolistic platforms are extremely hard to dislodge. Profits have thus grew healthily, and steadily, for a decade.
To outperform the tech-dominated US market requires one key metric: higher profit growth.
For example, European defence stocks have outperformed many US stocks in the last two years because of higher European defence spending. The whole sector is expanding rapidly and earnings are set to grow.
Rheinmetall (RHM), a German defence company, soared 10x in ten quarters.
Another example is the commodity sector. Precious metal miners are enjoying bumper profits because of higher gold and silver prices. As a result, mining stocks soared.
Fresnillo (FRES), one of the largest silver miners in the world, soared 6x in 18 months.
Back to original question: Which market will outperform US this year?
My guess are markets and sectors that are currently on (or at the start of) a cyclical upswing where profit growth outlook are upgraded.
Look at Canada (Composite Index). The cyclical upswing in commodity prices is fuelling a strong rally there.
Japan, as suggested by Darren above, may also do well. But the rally there is tempered by sharply falling Yen.
Another index – Stoxx 50 – is hitting new long-term highs. It may do well as European mega-caps start to dominate.
Looking inside the US market, there are some relative plays for 2026. The small cap sector (Russell 2000, ticker:IWM) may outperform the Magnificent 7.
I don’t like to bet against the US market (the S&P 500 index). Because it has a fantastic long-term track record.
However, some indexes that could potentially beat the S&P 500 this year include:
* The S&P Equal Weight index: Late last year, investors started to rotate out of the technology sector and into other sectors such as Financials, Healthcare, and Industrials. If this trend continues in 2026 (I think it might), the S&P 500 Equal Weight index could outperform the S&P 500 (which is heavily weighted to technology stocks).
* The Stoxx Europe 600 index: This European index (which includes UK stocks) has a large weighting to banks and industrials – two sectors that are performing well right now. I think there’s a reasonable chance that it could outperform the S&P 500 this year, especially if US tech stocks underperform.
* MSCI World Healthcare index: Healthcare stocks could be a major beneficiary of the broadening out of the market. These stocks offer a nice mix of growth and defence and right now, the sector is attractively valued.
* S&P GSCI Precious Metals index: This is a commodities index that provides exposure to precious metals (ie gold and silver). Gold and silver are both flying right now due to high levels of geopolitical and economic uncertainty – if this trend continues, this index could do well in 2026.
I think the key for investors this year is asset class, geographic, and sector diversification. Aim to build a portfolio that has exposure to many different asset classes, geographic regions and sectors – this should pay off.
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