Global Markets Take the Crown: International Stocks Lead the 2025 Rally
For years, it felt like the US stock market had an unshakeable grip on the top spot. But as 2025 draws to a close, the financial world is celebrating a much more diverse and truly global success story. In a significant shift from the trends of the recent past, international stocks were the undeniable leaders of the year, providing a compelling argument for portfolio diversification.
While Wall Street certainly had a fantastic year—the S&P 500 index posted yet another strong run, rising approximately 16% on a price-return basis—it was simply outpaced by many of its overseas counterparts. The collective market capitalization of global stocks, excluding the United States, surged by a remarkable 26% over the course of the year. This broad-based rally confirms that opportunities for profit aren’t just limited to American borders anymore.
If you look at the index leaderboards, the shift is clear. Among the major developed markets, Japan’s Nikkei 225, for instance, delivered an impressive annual return of around 26%. The UK’s FTSE 100 also shone brightly, with gains nearing 22%. Further demonstrating the depth of the global resurgence, standout performances were seen in a range of regions, with Canada’s main index, the TSX, leading the charge with a gain of over 28%, and the Hang Seng in Hong Kong close behind. Even a handful of key emerging markets and European countries posted truly staggering returns, with South Korea, Spain, and South Africa leading the charge.
What drove this incredible year of outperformance? The story of 2025 is really a tale of three key factors.
First, a crucial tailwind for non-US assets was the weakening of the US dollar relative to other major currencies. For American investors, this currency effect magnified the gains from their foreign holdings, turning a great year into a spectacular one. Compounding this, falling interest rates in Europe gave markets an anticipated macro boost, stimulating economic activity across the continent.
Second, the entire world benefited from the unrelenting momentum in technology. Although many of the top-performing companies hailed from the US—with giants like Alphabet delivering exceptional returns of over 60% and leading the AI surge—the global infrastructure and supply chain feeding this boom saw widespread gains. This technology-driven growth helped elevate markets across all regions.
Finally, the global market’s resilience was severely tested but ultimately proved its strength. The year was marked by a brief but sharp “Liberation Day Drop” in April, when major US tariff announcements rattled markets globally. Yet, following subsequent trade adjustments and agreements, the markets not only recovered but surged higher, with the S&P 500 bouncing back a stunning 39% from its spring low. This ability to absorb a major geopolitical shock and quickly resume the uptrend was a defining characteristic of the 2025 trading year.
As we look ahead, the remarkable returns of 2025 serve as a powerful reminder that investors can find significant value and leadership well beyond any single country’s borders.
