Shifts in policy from US President Donald Trump, who is overturning the global order previously upheld by the White House in economic, trade, and security domains, are prompting actions among American allies. Financial markets are closely monitoring these developments. For investors, signs of more assertive policies and moves beyond existing trade agreements with the United States are encouraging increased investment in non-US stock markets and energy equities, alongside positive outlooks for currencies such as the euro and the Canadian dollar.

Canadian Prime Minister Mark Carney’s speech at the Davos forum in January resonated widely, highlighting how "middle powers" can unite to avoid becoming casualties of US dominance. Meanwhile, a European Central Bank plan aimed at strengthening the euro’s international role is expected to be unveiled at this week’s Munich Security Conference.

Seema Shah, Chief Global Strategist at Principal Global Investors, which manages approximately $594 billion in assets, noted, "Trump has decoupled the US from the rest of the world, but in doing so, he has also contributed to an improvement in the global macroeconomic landscape, to which investors are responding." She emphasized that the strategy is not about divesting from the US but recognizing opportunities beyond it, with the firm increasing its focus on international equities. Shah added that earnings momentum remains strong in Europe and Asia.

Madison Faller, Global Investment Strategist at J.P. Morgan Private Bank, suggested that as the era of American exceptionalism fades, major and emerging equity markets are poised for double-digit earnings growth by 2026. Data from LSEG I/B/E/S shows that among the 52 companies in the Europe Stoxx 600 index that have reported Q4 results so far, over 73% have exceeded expectations, compared to a historical average of 54%. The UK’s FTSE 100 index recently broke through the 10,000-point mark for the first time, climbing 5% year-to-date, significantly outpacing the S&P 500’s 1.4% gain.

BNP Paribas indicated that its €600 million European Strategic Autonomy Fund, launched in May last and investing in defense, industrial resilience, resource independence, and technology, is largely driven by Europe’s large-scale investment initiatives. However, replacing US trade remains challenging, and aside from symbolic significance, non-US trade agreements—such as those between the EU and India, the Mercosur bloc, and preliminary deals involving Canada and China—will take time to yield tangible effects.

European cohesion has been reinforced by the COVID-19 crisis, the Russia-Ukraine war, and Trump’s tariff policies, which have exposed vulnerabilities in global supply chains and economic dependencies. Recent developments, including US presidential interest in Greenland, may accelerate this shift, underscoring the need for more fiscal stimulus globally and potential further joint bond issuance by the EU.

Defense stocks have emerged as winners, surging 200% since February 2022. The UK is currently considering participation in a potential second multi-billion-euro EU defense project fund. Ross Hutchison, Zurich Insurance Group’s Head of Euro Area Market Strategy, noted that while long-term geopolitical structural shifts are hard to predict, energy production is gaining market favor due to focus on critical resources and AI infrastructure. "There is broad consensus that many countries will undertake significant infrastructure building to enhance resilience," he observed, pointing out that European energy stocks have risen close to their highest levels since 2008.

Christian Schulz, Chief Economist at Allianz Global Investors, suggested that Europe may also advance autonomy more broadly in digital services, security, and healthcare. In a recent op-ed co-signed by CEOs of companies such as steelmaker ArcelorMittal SA, pharmaceutical firm Novo Nordisk A/S, and tire manufacturer Continental AG, EU Industry Chief Stephane Sejourne argued that Europe must safeguard its industries through a "Made in Europe" strategy. The initiative would set minimum requirements for European content in locally manufactured goods, though EU member states remain divided on the proposal.

Analysts note that long-term efforts to spur economic growth, whether through trade or increased spending, are likely to persist. Thierry Wizman, Global FX and Rates Strategist at Macquarie Group, suggested that if deregulation, streamlined bureaucracy, and growth-oriented fiscal policies are implemented, currencies like the Canadian dollar, Japanese yen, and euro could benefit. J.P. Morgan Private Bank’s Faller concluded, "Middle powers are seizing strategic autonomy and forming partnerships that align with their interests and current needs."