State of the Union vs State of the Markets: Capital is Moving On

Global investors are rotating away from US equities despite President Trump’s stock market optimism in last night’s State of the Union speech, asserts the CEO of one of the world’s largest independent financial advisory organizations.

The analysis from Nigel Green of deVere Group comes as President Trump used his State of the Union address to spotlight record highs in US stock markets, presenting equity performance as clear evidence of economic strength under his administration.

Yet fresh investor positioning data indicate one of the most significant rotations away from US equities in decades.

Although US benchmarks have touched record territory in recent months, performance this year has lagged major European and Asian indices.

The S&P 500 has traded in a narrow and largely directionless range, modestly negative on the year, even as overseas markets advance.

Regular global fund manager surveys show the strongest positive allocation to eurozone assets on record.

Over recent months, overweight positions in European equities have surged, while underweight allocations to US stocks have more than tripled.

Nigel Green, Founder and CEO of deVere Group, says: “President Trump is right to highlight record market levels. But markets are forward-looking mechanisms. When we examine capital flows rather than speeches, we see a clear and measurable broadening of exposure beyond the US.

“Market participants report that while large-scale capital flight is not occurring, incremental global flows are increasingly being directed away from the United States.”

He continues: “For more than a decade, US exceptionalism has anchored global portfolios, driven largely by tech sector dominance.

“As volatility increases around AI-related names and economic growth moderates to 1.4% annualized, allocators are reassessing concentration risk.”

The shift reflects multiple converging pressures. The extraordinary reliance on a narrow group of large-cap tech stocks has left US indices vulnerable to sector-specific pullbacks.

At the same time, improving fiscal momentum in parts of Europe, particularly Germany, and stabilising sentiment indicators across the eurozone are encouraging a reweighting of global exposure.

Importantly, recent policy adjustments from Washington, including recalibrations around tariffs, have not triggered a sustained rebound in US equity leadership. Relative performance trends suggest the reallocation is structural rather than reactive.

The deVere CEO adds: “Of course, the US remains a core engine of global growth.

“But capital markets evolve. Investors aren’t reducing US exposure out of sentiment; they’re, sensibly, increasing diversification because risk-adjusted opportunities are broadening elsewhere.”

Record inflows into European equity funds underscore the scale of the shift. For the first time in decades, the dominance of US equities within global benchmark allocations is being actively questioned by institutional investors.

The contrast between the State of the Union emphasis on record highs and the quieter rebalancing within global portfolios highlights a defining feature of 2026 markets: headline index levels alone no longer dictate capital direction.

As the year progresses, sustained earnings breadth and renewed sector leadership will determine whether US equities regain relative momentum.

For now, the data show that global capital is incrementally repositioning, with the balance of flows suggesting the shift is gathering pace.

Nigel Green concludes: “President Trump’s State of the Union address celebrated where markets have been. Investors are positioning for where they are going.

“Those are, perhaps, two very different conversations.”