US economic dominance has not always translated into stock market outperformance. Since the Global Financial Crisis (GFC), however, US equities have largely outperformed those in the rest of the world. The main driver for this has been higher growth in earnings per share, which has not only been due to stronger economic growth. Another factor has been a more rapid rise in valuations in the US than elsewhere. What’s more, the US stock market has benefitted from “big tech” firms having fared especially well and more generally from the larger share of faster growing sectors like information technology (IT). And a stronger dollar has also weighed on equity returns elsewhere in common currency terms.
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