Faced with big US changes, should investors look abroad?

Stocks

Summary:

U.S. market volatility and Trump’s tariffs have investors questioning American stocks' dominance. International equities, seen as cheaper and more resilient, are outperforming, highlighting the importance of global diversification in portfolios.

US stocks melted down and market volatility soared after President Donald Trump announced his across-the-board punitive tariffs regime on April 2. While international stocks got hurt too, overall they’ve done better.

Sure, US stocks were considered overvalued coming into 2025. But the loss of trillions of dollars over a matter of days in April was extreme. And it wasn’t much comfort when stocks staged some mini-relief rallies on hopes that things might not be quite as bad as feared because Trump was postponing or lessening certain tariffs, or there were signs his advisers convinced him firing the Federal Reserve chair would be bad for markets and the economy.

Coupled with the decline in the value of the US dollar — long considered to be the world’s reserve currency — the negative economic effects of Trump’s tariffs are pushing investors to wonder if the US is still the strongest and safest bet relative to other countries.

So far, the answer to that question seems to be a very qualified “Yes, but …”

“People are still trying to figure out what’s happening,” said Amy Arnott, a chartered financial analyst and portfolio strategist at Morningstar.

As things stand, “both cyclical and structural changes to U.S. exceptionalism are now on the table, being priced at a greater-than-zero probability of weakening,” the global equity team at investment firm Wiliam Blair noted last week in a blog.

Looking abroad for value

There’s a question of whether US investors should allocate more — or just some — money to international equities.

Individual US investors typically haven’t had a lot — or even any, in some cases — exposure to stocks from countries with developed or emerging economies in their portfolios. And they haven’t suffered for it in the past decade. That’s because US stocks handily outperformed non-US stocks by as much as four to five percentage points a year, Arnott said.

But this year, the reverse may be happening.

The Morningstar Global Markets Index ex-US was up 6.46% year to date through April 24. By contrast, its US Markets Index was down 6.59%.

The reason is likely two-fold, Arnott said: International stocks are less expensive than their US cousins and there’s been heightened concern and uncertainty about US policies.

Over the next several years, Vanguard’s investment outlook, for instance, continues to forecast that international equities will outperform US stocks due to more attractive valuations.

Still, net money flows into US equity mutual funds and ETFs have remained positive year to date through mid-April, according to data from the Investment Company Institute, suggesting US equities remain an attractive bet overall.

Diversity remains a good hedge

However, this year has reminded investors why having a diversified portfolio is helpful when US stocks are dropping.

Consider the balanced model portfolio with 60% stocks and 40% bonds. Its best feature: a lower risk and volatility profile than portfolios more heavily invested in stocks.

Such a portfolio that only invested in US stocks for the equity portion was down roughly 3% year to date — much better than the bigger drops on US stock indexes. But if 20% of the stock portion had been in international equities, the portfolio would be down just 0.41%, Arnott said. “If you had international exposure, you would have done significantly better.”

Of course, US Treasuries have been on a scary trip too in the past month. Normally when stocks are plunging, investors pour into US government bonds, pushing their prices up and their yields down, because they’re buying safety — that they won’t lose money and that they will always be paid back. But in the second week of April there was a sell-off, pushing Treasury yields higher — and in the case of the 10- and 30-year bonds, yields have remained higher than they were on April 2.

Granted, it’s not the first time US bonds have bucked their reputation. See: Your portfolio returns for 2022.

The question is, will this remain a problem going forward? Answer: Who knows?

Much may depend on how the US and world economies adjust to the many trade wars that have been ignited, which economists warn will make US inflation worse and slow economic growth.

“In a scenario where we have inflation flaring up again, that could put pressure on stocks and bonds. So, holding a diversified portfolio with bonds and international stocks is not a magic bullet in every market. But it improves the odds that you’ll have some ability to withstand volatility,” Arnott said.

A path forward for now

If your prime exposure to the markets is through a retirement-year target date fund in a 401(k) or IRA, you may already have the diversification you need, especially when it comes to international equities.

That’s because for years, target date funds have been overweight in international stocks, said Jason Kephart, a senior principal of multi-asset strategy ratings at Morningstar.

Compared to all equity mutual and exchange traded funds, which aim to hold 25% in non-US assets, target date funds have allocated 30%, Kephart said.

That has started to pay off this year, Kephart said.“Diversification is finally being rewarded,” he said.

Similarly, a target date fund will make adjustments to the bond holdings in your portfolio, bumping up the allocation to a diversified mix of high-quality government and corporate bonds the closer you get to your target retirement year (e.g., 2030, 2040, 2050).

But if you’re not in a target-date fund and you are managing the asset allocation in your retirement account, you might consider having up to 35% of the stocks portion of your portfolio in non-US equities, Arnott said. That would echo how the MSCI All Countries World Index (ACWI) is weighted toward non-US stocks.

Or depending on your risk tolerance, you might follow the advice of Adam Grossman, a chartered financial analyst and founder of Mayport Wealth Management. In his latest weekly newsletter he suggests an allocation to international stocks “in the neighborhood” of 20%. “According to the data, that’s enough to deliver a diversification benefit, but not so much that it introduces significant currency risk,” he wrote.

Either way, you can get your exposure to non-US stocks through a low-cost world markets ex-US index fund. (Morningstar offers its pick of the top 10 here.)

As for bonds, Arnott suggests looking for a core bond fund for your 401(k) — which will be invested in different types of government and investment-grade corporate bonds.

If you’re investing in bonds on your own — say, for the portion of your money that you want readily available to draw on for living expenses when you’re in or near retirement — “Focus your bond allocation on the short- to intermediate-term portion of the yield curve. I would be very cautious with longer-term Treasuries. That is where the risk is greatest,” she said.

source :cnn

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Kevin Du

Political

“The punchline is I think this is really status quo,” Eric Nuttall, partner and senior portfolio manager at Ninepoint Partners, told BNN Bloomberg in a Tuesday interview following Monday’s federal election that resulted in a minority government for the Liberals, according to CTV News projections.

“You effectively have the same team in place, at least, who has governed for the past 10 years.”

Nuttall said that while Carney made numerous comments on the campaign trail about supporting Canada’s energy industry, it remains unclear what exactly the next Liberal government’s energy priorities will be.

“Details were extremely light. We heard things like Canada needs to be a global energy superpower, then it pivoted towards a clean energy superpower, so there’s pros and cons,” he said.

“Given the minority government status, one positive coming out of this is the unlikelihood of an emissions cap actually becoming a law… it was something (the Liberals) were likely to try to do but given minority status that looks like it’s challenged.”

Nuttall said that the federal Liberals have “unfortunately” signalled that they intend to keep Bill C-69 – known as the Impact Assessment Act but referred to by critics as the “no pipelines bill” – in place, a bill the Conservative Party pledged to repeal if elected.

“It’s my view that as long as that remains Canadian law, we will never see another pipeline built in this country again, there just seems to be a philosophical difference in terms of how we can move the ball down the field,” he said.

“It’s critically important to grow our oil pipeline capacity to lower our customer concentration risk to the United States, it would put us in such a stronger position but that doesn’t seem to be the case.”

Source: BNN BIoomberg

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Adam

Forex

Dollar Index Stabilizes Near Key Technical Pivot as Trade and Labor Concerns Weigh

The U.S. Dollar Index (DXY) is stabilizing just above a crucial short-term pivot at 99.100, which has emerged as a decisive inflection point for near-term direction. Price action on Tuesday shows modest gains, with the index up 0.25% to 99.28 after Monday’s 0.58% drop.

However, downside pressure remains evident, as the DXY teeters on the edge of a 7.7% two-month decline — its steepest since 2002 — reflecting broader macroeconomic skepticism around U.S. policy direction and capital outflows.

Euro Strength Weighs on Dollar Amid German Spending Plans

US Dollar Forecast: DXY Struggles Near 99.10 as Tariff Risks and Jobs Data Pressure Market_1

Daily EUR/USD

Support for the euro surged in early March after Germany’s political leadership signaled a major fiscal expansion — a significant departure from its long-standing austerity stance.

This move revived optimism around eurozone growth and shifted capital away from the dollar. While the euro eased 0.38% to $1.1379 on Tuesday, it remains on course for its strongest monthly performance in over two years.

Safe-Haven Demand and Tariff Volatility

The dollar has also contended with a stronger yen and Swiss franc as investors rotated into safer currencies in response to geopolitical stress, particularly renewed U.S.-China tariff tensions. Although the Trump administration hinted at easing automotive tariffs, conflicting rhetoric has kept risk sentiment unstable.

Treasury Secretary Scott Bessent’s remarks that de-escalation depends on China underscore the uncertainty clouding progress. Analysts continue to flag that global bond and equity outflows from the U.S. indicate a “buyers’ strike” on dollar-denominated assets, despite a modest recovery in prices.

Labor Market Softening Despite Lower Layoffs

Labor data released Tuesday revealed a mixed picture. Job openings fell by 288,000 to 7.192 million in March, signaling growing employer caution.

Meanwhile, layoffs dropped to 1.558 million, indicating some underlying labor market stability. Still, hiring increased only marginally, and with federal workforce cuts looming and tariffs expected to disrupt supply chains, forward-looking labor strength remains uncertain.

Outlook: Dollar Index at Risk Without Clear Catalysts

US Dollar Forecast: DXY Struggles Near 99.10 as Tariff Risks and Jobs Data Pressure Market_2

Daily US Dollar Index (DXY)

The DXY’s short-term fate hinges on holding the 99.100 pivot. A break below this level could expose the index to the long-term support at 97.921. Resistance lies at 99.939 and 100.276; a confirmed breakout above these levels could open the path to 101.302.

However, lacking a bullish catalyst — such as stronger U.S. data or credible tariff resolution — the dollar remains vulnerable to further selling pressure, especially as traders weigh eurozone growth potential and seek safe-haven alternatives.

Source: fxempire

Risk Warnings and Disclaimers

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Diana Wallace

Economic

NEW YORK (AP) — Amazon is not planning to list added tariff costs next to product prices on its site — despite speculation spanning from a report that claimed the e-commerce giant would soon show new import charges, as well as fiery comments from President Donald Trump's White House denouncing such a move.

The Trump administration's reaction appeared to be based on a misinterpretation of internal plans being considered by Amazon, rather than a final decision made by the company.

Amazon's Haul service — a recently launched, low-cost storefront — “considered the idea” of listing import charges on certain products, company spokesperson Tim Doyle said in a statement sent to The Associated Press. But this "was never approved and is not going to happen.”

Amazon launched Haul last year to sell electronics, apparel and other products priced under $20, aimed at competing against the success of China-founded rivals like Temu and Shein.

Earlier Tuesday, Punchbowl News had reported that Amazon planned to start showing how much of each product's cost derived from tariffs “right next to” its total listed price, citing an anonymous source familiar with the matter. While Amazon later confirmed that it would not be listing such added costs, the Trump administration was quick to criticize news of the move early Tuesday.

White House press secretary Karoline Leavitt accused Amazon of taking a "hostile and political act” — and further attacked the company by suggesting it was un-American.

“Amazon has partnered with a Chinese propaganda arm,” Leavitt said at a Tuesday briefing with reporters.

It was unclear if the administration had been in contact with Amazon about the company's response to tariffs — or potential ideas around communicating price hikes with shoppers. At Tuesday's briefing, Leavitt said she had “just got off the phone with the president about Amazon's announcement."

Amazon founder Jeff Bezos was one of a handful of powerful, ultra-wealthy tech titans who attended Trump's inauguration in January — filling some of the most exclusive seats right behind the president. Whether his relationship with the president has strained since has yet to be seen, and Leavitt declined to comment when asked by reporters Tuesday.

The tariffs imposed by Trump — and responding retaliation from targeted countries, notably China — threaten to increase prices for both consumers and businesses. Economists warned that these import taxes will hike prices for a range of goods consumers buy each day — and lead to worse inflationary pressure.

Source: Yahoo Finance

To stay updated on all economic events of today, please check out our Economic calendar

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Adam

Commodity

Gold prices are trading just off session lows after the latest data showed U.S. consumer sentiment declining further than expected this month.

The Consumer Confidence Index fell to 86 in April, below economists’ consensus forecast for a 87.5 reading and also below the upwardly revised 93.9 print in March, the Conference Board said on Tuesday.

The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, decreased by 0.9 points to 133.5, while the Expectations Index, based on consumers’ short-term outlook for income, business, and labor market conditions, dropped 12.5 points to 54.4, the lowest level since October 2011 and well below the threshold of 80 that usually signals a recession ahead.

Gold prices fell to session lows following the 10 am EST consumer sentiment data release, with spot gold last trading at $3,309.39 per ounce at the time of writing for a loss of 1.03% on the session.

Spot gold tests $3,300/oz support as U.S. Consumer Confidence falls to 86 in April _1

“Consumer confidence declined for a fifth consecutive month in April, falling to levels not seen since the onset of the COVID pandemic,” said Stephanie Guichard, Senior Economist, Global Indicators at The Conference Board. “The decline was largely driven by consumers’ expectations. The three expectation components—business conditions, employment prospects, and future income—all deteriorated sharply, reflecting pervasive pessimism about the future.”

“Notably, the share of consumers expecting fewer jobs in the next six months (32.1%) was nearly as high as in April 2009, in the middle of the Great Recession,” Guichard added. “In addition, expectations about future income prospects turned clearly negative for the first time in five years, suggesting that concerns about the economy have now spread to consumers worrying about their own personal situations. However, consumers’ views of the present have held up, containing the overall decline in the Index.”

April’s decline in confidence was seen across all age groups and most income groups. “The decline was sharpest among consumers between 35 and 55 years old, and consumers in households earning more than $125,000 a year,” the report said. “The decline in confidence was shared across all political affiliations.”

“High financial market volatility in April pushed consumers’ views about the stock market deeper into negative territory, with 48.5% expecting stock prices to decline over the next 12 months (the highest share since October 2011),” Guichard added. “Meanwhile, average 12-month inflation expectations reached 7% in April—the highest since November 2022, when the US was experiencing extremely high inflation.”

According to the write-in responses on what topics are affecting views of the economy, tariffs are now on top of consumers’ minds, with mentions of tariffs reaching an all-time high.

“Consumers explicitly mentioned concerns about tariffs increasing prices and having negative impacts on the economy,” the report noted. “Inflation and high prices remained important for consumers’ views about the economy: while the majority complained about the high cost of living, there were also some references to declines in the prices of gas and some food items. There were also numerous mentions of stock prices and uncertainty.”

The proportion of consumers anticipating a recession over the next 12 months rose to a two-year high, and the share of consumers expecting higher interest rates over the next 12 months continued to increase while the share of consumers expecting lower interest rates dropped further.

Source: kitco

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Adam

Forex

The Japanese yen has steadied on Tuesday after surging 1.1% against the US dollar a day earlier. In the North American session, USD/JPY is trading at 142.19, up 0.13% on the day.

Red-hot yen is up 10% in 2025

The yen is red-hot and shows no signs of slowing down against the struggling US dollar. The Japanese currency has soared as much as 6.7% in April and has climbed a massive 10% since the start of the year. In this turbulent economic environment, jittery investors have flocked to safe havens such as the yen, as President Trump's erratic trade policy has triggered a "sell America" wave in the financial markets.

Japan is hoping to mitigate the impact of US tariffs, which pose a threat to the export-reliant country. The finance ministers of the US and Japan met on Thursday and Japan will be trying to use its leverage as the fourth-largest US trading partner to carve out some tariff exemptions.

The Bank of Japan is concerned about Trump's tariff policy and has adopted a wait-and-see attitude. BoJ officials have signaled that the central bank remains on track to hike interest rates but is widely expected to hold rates at Thursday's meeting.

US JOLTS Job Openings misses expectationsIn

the US, the focus will be on job numbers in the second half of the week. JOLTS Job Openings slipped to 7.19 million, down from 7.48 million and below the market estimate of 7.48 million.

All eyes are on Friday's nonfarm payrolls, which surprised on the upside last month with a gain of 228 thousand, blowing past the forecast of 140 thousand. The markets are braced for a weak nonfarm payrolls release of 135 thousand.

USD/JPY Technical

Japanese yen surges due to market jitters_1

USDJPY Chart 1-Day, April 29, 2025

Source: marketpulse

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Catherine Richards

Russia-Ukraine Conflict

Ukraine's President Volodymyr Zelensky has blasted President Putin's unilaterally declared three-day ceasefire set for May 8-10, which correspondents with Russia's Victory Day celebrations, as an "attempt at manipulation."

"Now there's a new attempt at manipulation: for some reason, everyone has to wait until May 8," Zelensky said in his daily address Monday evening. This will mark the 80th anniversary for Moscow's World War 2 commemorations, a major national civic holiday.

Ukraine has instead offered an immediate truce with Russia for "at least 30 days." Ukrainian Foreign Minister Andrii Sybiha previously questioned, "If Russia truly wants peace, it must cease fire immediately. Why wait until May 8?"

Moscow has rejected any premature longer term truce ahead of lasting settlement and territorial concessions from the Ukrainian side, fearing that it would just be used to regroup and rearm along the front lines.

Russia has further rejected this new call for a 30-day truce instead of the three day ceasefire. "It's difficult to agree to such a long-term truce without answers to the questions raised by Putin," Kremlin spokesman Dmitry Peskov told reporters.

"We haven't heard the Kyiv regime's reaction, and it's unclear whether they plan to join the truce," Peskov said. "Nevertheless, we hope the Russian president's peace initiative will be appreciated," he added. "The first step is to start the negotiation process — everything else is secondary."

Kiev did appear to observe the prior Easter truce, though each side accused the other of some violations. But it set a precedent which Moscow is hoping to follow on with in pushing the V-Day ceasefire; however, skeptics have said this is really to ensure no disruptions happen at national public commemoration events (such as inbound drones in the Moscow region).

Trump admin officials have called this week "critical" for determining whether lasting peace in Ukraine can be forged.

Rubio said that the coming week will be “very critical” for the White House as it makes a “determination about whether this is an endeavor that we want to continue to be involved in.”

“There are reasons to be optimistic, but there are reasons to be realistic,” Rubio said, adding: “We're close, but we're not close enough.”

“Throughout this process, it's about determining, do both sides really want peace and how close are they or how far apart they are after 90 days of effort here ... that's what we're trying to determine this week,” Rubio said of negotiations.

But it's unclear what this ultimatum of sorts (given to both sides?) really means. Will the US stop arming Ukraine if no peace deal is reached? Will more sanctions simply be piled onto Moscow?

Trump is increasingly frustrated with leaders of both Russia and Ukraine. President Trump has warned the Russians that his patience will soon run thin, amid accusations from hawks that Moscow is simply stalling for the sake of battlefield gains. Putin this month declared the full liberation of Kursk region, leaving Zelensky with no cards to play at all. Trump himself has acknowledged that Zelensky has no real leverage at this point.