The first signs of a global resurgence driven by fiscal policy came from Germany, which had long laboured under a significant public debt limit. Mordy explains that by breaking that taboo, Germany has been able to stimulate GDP growth and reinvigorate interest in European industrials, defense stocks, and European banks. Southern Europe, meanwhile, has emerged as an unlikely leader within the bloc after years of post-financial-crisis deleveraging. With the European Central Bank cutting rates eight times over the past 18 months, Mordy sees Europe now exhibiting the hallmarks of a classic cyclical recovery.
While the TACO trade saw a resumption in investor appetite for AI stocks after liberation day and broad European indexes traded flatter, Mordy notes that the European banking sector is a good indicator of future prospects for the continent, as it serves to measure liquidity and risk appetite. That sector is up well over 50 per cent year to date. Wages, too, are up in Europe while inflation seems relatively tame and corporate earnings are rising, offering the classic signals of a cyclical recovery.
Moving to Asia, Mordy has also seen a major shift away from China’s structural downturn. Over the last five years, China has worked to digest both its real estate bubble and its crackdown on entrepreneurs. It has now established leadership in a number of significant sectors, including electric vehicles and solar panels. The Chinese state has become more shareholder friendly in the past year, which has spurred new capital markets appreciation.
Chinese tech has also become a major area of investor interest, with big tech names offering somewhat similar exposure to the same themes as the US-listed magnificent seven stocks, but with more attractive valuations. As a result, Mordy says many investors have begun viewing Chinese tech as a more attractively priced way to access the AI theme.
Smaller global stories have taken root as well in 2025. Mordy notes the example of Chile, the world’s largest copper producer. Chilean equities have benefitted from a shift in Latin America towards greater economic self-sufficiency, while its massive copper mining sector has benefitted from the huge demand for that metal in the building of AI infrastructure. Japan has been another bright spot, with equities finally surpassing their 1989 peak as the country escapes its deflationary cycle, sees sustained wage growth, and benefits from stronger exports supported by a deeply undervalued yen.
