Betting on the demise of the long-running leadership of US shares over foreign markets has been a losing proposition for some time and the early going in 2024 suggests the trend persists. It’s only February and so the new year is still ripe with opportunity, risk, and surprise. But judging by year-to-date results, old history is repeating, again, in terms of relative performance for US stocks, based on a set of ETFs through Friday’s close (Feb. 2).

Vanguard US Total Stock Market Index Fund (VTI) is up 3.4% so far this year. That’s ahead of the rest of the world’s major equity regions and a pair of global equities benchmarks. World stocks that hold US shares (VT) are up 1.6% year to date while foreign equities ex-US are down 1.5% in 2024.

Slicing world markets on a more granular level also highlights US dominance, albeit with a close horse race via stocks in Japan (EWJ). VTI is still beating EWJ year to date, but by a tiny margin: 3.7% to 3.4%.

The Japanese stock market was a strong competitor vis-à-vis US shares last year too. EWJ rose 20.3% in 2023, moderately behind VTI’s world-beating 26.1% rise. The close competition continues in 2024 and so, for the moment, Japan’s market is well-positioned to potentially overtake US shares.

At the opposite end of the spectrum, ongoing losses in China stocks show now signs of ending. The iShares MSCI China ETF (MCHI) has already shed 11.5% year to date. The current run of red ink for MCHI follows two straight calendar years of negative results.

The downside outlier status of China (MCHI) is especially striking over the trailing one-year window relative to shares in the US (VTI), global stocks (VT), and world ex-US (VXUS) shares.

For contrarians betting that the leadership in US shares is running out of roads, optimists counter that expectations for interest rate cuts will keep hope (and upside momentum) alive.

“From a macroeconomic perspective, generally speaking, the US economy is the most important driver of equity performance broadly,” Goldman Sachs equity strategist Ben Snider recently told Yahoo Finance. “I don’t think it matters very much whether the Fed starts to cut in March or May or June. The key dynamic is that the Fed is incentivizing on-the-margin investors to move out of cash and reducing the cost of capital environment for small businesses that rely frequently on outside financing.”

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