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Schroders Equity Lens December 2025: your go-to guide to global equity markets
How have 2025’s valuation and earnings shifts impacted the appeal of US vs non-US equities?
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The December 2025 edition of the Schroders Equity Lens is now available: Schroders Equity Lens
Summary:
- Stock markets have delivered superb returns for investors so far in 2025, sending them back to near all-time highs. This isn’t the sell-signal many might assume (slides 5-8).
- Rising valuations and a weaker dollar have boosted non-US markets this year in USD terms, even as earnings have favoured the US (slides 21 and 25-26).
- This has made non-US markets more expensive. Although they are still cheap vs the US, the extent of this has come down notably. No market is cheap vs its own history (slides 30-31).
- Earnings revisions are encouraging and growth expectations for 2026-27 are strong, providing a fundamental basis for performance (slides 26 and 28).
- There have recently been bouts of market jitters but this is perfectly normal market behaviour. Sticking to a long-term plan and staying invested would have been the better approach historically, rather than over-reacting (slides 9-13).
- The US market highlights diverging risk appetite: although they’ve fallen back recently, tech companies with no revenues or profits are flying this year, as are the engines of US profit growth, the Mag-7. The rest are being left in the shade (slide 14).
- Capex is going through the roof at the hyperscalers. It’s on track to treble in the three years to 2026. More capital-intensive businesses tend to trade on lower valuation multiples. Share prices may still rise if earnings rise fast enough, but the change in capital intensity is a risk for these companies (slides 16-18).
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