LIVE MARKETS-US exceptionalism under threat?

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US EXCEPTIONALISM UNDER THREAT?

As markets gear up for Nvidia's results on Wednesday, the first release since the emergence of DeepSeek's AI model sent shockwaves through markets, J.P.Morgan has weighed in on the debate over the future of the "U.S. exceptionalism" trade.

In noting how Wall Street is lagging international markets by 5% this year and that its valuation premium is still highly above historical standards, the U.S. bank wonders whether one should expect a further unwind of the U.S. trade.

Mislav Matejka, strategist at JPM, says there are factors in place that should support regional rotation, having turned less positive on Growth and being neutral on Tech for this year.

This, however, does not necessarily mean the U.S. will underperform from here for the rest of 2025, considering the still wide growth and earnings differential vs the rest, and with tariffs escalation a wild card.

"In order to be outright bearish on U.S. equities vs others, one would need to see U.S. earnings starting to undershoot the rest... For that to happen, the (rest of world) growth would need to accelerate vs the U.S., but we do not expect the activity gap to be closing in a hurry," he wrote in a research note.

(Danilo Masoni)

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