By Nandini Sanyal

Copyright indiatimes

ETMarkets.comThe backdrop for non-US markets is the strongest in years. A weaker US dollar, diversification from expensive US equities, and Fed rate cutsare improving sentiment toward global equities.

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Adrian Mowat, Emerging Market (EM) Equity Strategist, believes that while Wall Street continues to soar, much of the rally is being fuelled by artificial intelligence (AI) enthusiasm rather than underlying US economic strength. Speaking to ET Now, Mowat highlighted that the Federal Reserve faces a difficult policy environment with slowing labour market data, stubborn inflation, and an equity market that may be sending misleading signals.“The S&P is telling us more about the hype on AI than the health of the US economy,” he said, adding that inflation above target could keep the Fed cautious on further rate cuts in 2025.EMs and India in focusMowat pointed out that the backdrop for non-US markets is the strongest in years. A weaker US dollar, diversification from expensive US equities, and Fed rate cuts—even if gradual—are improving sentiment toward global equities. European markets, especially banks, have performed strongly, and capital is flowing into emerging markets.“India, however, remains a laggard compared to China,” Mowat noted, citing stronger shareholder return policies in China such as buybacks and rising dividends.Live EventsMORE STORIES FOR YOU✕Sensex to hit 94,000 in 2026? 4 reasons why HSBC upgraded Indian stocksWill US Fed rate cut lead to revival of foreign investment in Indian stocksStagflation, not recession, is the key threat ahead: Florian Neto« Back to recommendation storiesI don’t want to see these stories becauseSUBMITTariffs and policy uncertainty a key riskBeyond monetary policy, Mowat flagged trade tensions and policy uncertainty under the Trump administration as major headwinds for business investment. Frequent executive orders, including H-1B visa restrictions, have created planning difficulties for companies.“Capital spending is heavily skewed towards AI infrastructure such as data centres and power equipment, while other sectors are cutting back,” he said. “This imbalance is concerning.”Equities, gold, and alternative assetsMowat explained that the unusual trend of equities and gold rising together is linked to capital rotation out of bond markets.“Bond markets remain noisy and uncertain, with concerns in US credit markets and fiscal challenges elsewhere,” he said. “That money is moving into equities, gold, and even cryptocurrencies. The gold rally is less about fundamentals and more about diversification away from bonds and the US dollar.”Market outlookMowat believes that while the AI boom is powering US equities, the real opportunity lies in emerging markets where valuations look more attractive and policy support is stronger. However, global markets remain vulnerable to policy shifts on tariffs and the uncertain trajectory of Fed actions.Add as a Reliable and Trusted News Source Add Now!
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Read More News onFederal Reserveemerging marketsIndia vs ChinaAdrian Mowatpolicy uncertaintyUS economyAI enthusiasmgold pricesequity marketDiversification

(What’s moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .) Subscribe to ET Prime and read the Economic Times ePaper Online.and Sensex Today. Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price…moreless

(You can now subscribe to our ETMarkets WhatsApp channel)Read More News onFederal Reserveemerging marketsIndia vs ChinaAdrian Mowatpolicy uncertaintyUS economyAI enthusiasmgold pricesequity marketDiversification(What’s moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .) Subscribe to ET Prime and read the Economic Times ePaper Online.and Sensex Today. Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price…moreless

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