Valuation gap between US stocks and the rest of the world

As the valuation gap between US stocks and the rest of the world widens again, pockets of opportunity can still be found abroad. The S&P 500 now trades at a 55% forward P/E premium to the Bloomberg Global ex-US Index, more than double the roughly 25% median from 2015-19. The spread peaked at a record 67% at the end of 2024, and fell to a low of just 41% after the April 2 tariff shock

Still, some markets remain deeply discounted in Latin America and the UK relative to pre-pandemic norms, compared to non-US global peers. UK and Mexican stocks, which once carried premiums, now lag by about 8% and 20%. Brazilian equities, once at a 12% discount on median, now trade at half that. Continental Europe’s 7% premium is in line with pre-Covid levels, but has eroded since 1Q despite aerospace & defense sector support.