Investors may need to consider foreign equity markets outside due in part to concerns over gains in U.S. stocks being concentrated in only a handful of companies, a top Barclays (LON:BARC) strategist told Bloomberg News.
In an interview with the news service, Alexander Altmann -- Barclays' global head of equities tactical strategies -- backed "shorting U.S. exceptionalism" at least in the short-term also because of recently elevated stock valuations.
Altmann noted that the call was tactical and did not mean that he was "structurally bearish" on U.S. exceptionalism, or the belief that U.S. stocks will continue to outperform their overseas peers. But he added that there does not seem to be "any room left in that narrative" in the near term.
Spurred on by an artificial intelligence-fueled rally in mega-cap Big Tech names, the benchmark S&P 500 has performed better in recent years than many foreign indices. Yet the so-called "Magnificent 7" group of index-powering tech stocks have been widely flat in the early weeks of 2025, as worries surround these companies' plans to spend heavily on AI following the emergence of a cut-price open-source AI model from Chinese start-up DeepSeek.
Meanwhile, equities in Europe have delivered strong returns so far this year, with a benchmark index for the region near record high levels thanks in large part to solid corporate earnings that have helped to mitigate fears over the impact of trade tensions with the U.S. Investors keen to snap up cheaper European options have also helped bolster regional stocks.
Relative political stability in the U.K. and France, as well as signs that the Bank of England and European Central will continue to slash interest rates in the coming months -- unlike their Federal Reserve counterparts -- have helped to undergird demand for European stocks as well.
Altmann has correctly been bullish on Europe in the past two months, although he did flag that these stocks could start to become more volatile in the lead-up to elections in Germany later this month, Bloomberg reported. Still, the vote may spark more buying opportunities, he said.
