The gap between European and American stock markets has widened to a 30-year high, and Trump's victory has sparked a warm-up of American asset investments.

In recent years, the lag of European stock markets compared to the US market has reached the highest level in nearly 30 years, and the election of Donald Trump has further exacerbated the global preference for US assets, potentially worsening this trend. Trump's comprehensive victory injected new strength into the US stock market, with the S&P 500 index rising by as much as 25% in the year, hitting a historical high, while the European benchmark Stoxx 600 index only rose by 5%. This significant difference in returns has not been seen since 1995. Trump's rise to power has already led to poor performance of European stock markets, and even before his formal inauguration, European stock markets had suffered a heavy blow. The region's economic growth has been persistently weak, expected to lag behind the US next year, without taking into account the potential impact of tariffs on its exports and the geopolitical risks. Michael Kelly, Global Head of Multi-Asset at Pinebridge Investments, pointed out that Europe is in a disadvantageous position on all trade issues, and China's policies can only slow down rather than reverse the economic slowdown, thus companies or countries relying on exports to China will face severe impacts. In this context, investors are flocking to US assets. A survey by Bank of America Global Fund Managers shows that investors continue to increase their allocation to US stocks, jumping to a net increase of 29% after the election. In contrast, the allocation to eurozone stocks is maintained at a net decrease of around 3%, and the allocation to UK stocks has even decreased to a net decrease of 13%. Investors seem willing to pay a higher premium for US stocks. The S&P 500 index currently has an expected price-to-earnings ratio of 22.5 times, nearing post-pandemic peaks and setting a historical high 70% higher than the Stoxx 600 index. Despite strategists at Industrial Bank of France believing that the US stock market is "undoubtedly expensive," valuation discussions no longer seem to be mainstream. Katherine Brooks, Head of Research at XTB, believes that the US will continue to dominate. She points out that the acceleration of economic and profit growth, as well as market momentum, make the US stock market clearly superior to the European stock market, and the European stock market may struggle to catch up.