Why JPMorgan says the international stock story still has legs

MarketWatch

by Jules Rimmer

February 23, 2026

AI-Generated Deep Dive Summary

JPMorgan highlights that international and emerging stocks are poised for continued growth due to favorable economic conditions. The combination of solid growth prospects, low inflation, a dovish Federal Reserve policy, and a weakening U.S. dollar creates an ideal environment for equities to thrive. International markets have already outperformed their U.S. counterparts in 2025 by 12% and are ahead by another 8% in the early months of 2026. Analysts predict that this trend will persist, driven by factors such as a broadening performance across small and mid-cap stocks and strong showings from international indices like ACWX (MSCI World ex USA Index) and emerging markets represented by EEM. The weakening dollar is particularly advantageous for international equities, as it makes U.S. exports more competitive and enhances the appeal of foreign assets denominated in other currencies. Mislav Matejka, the author of JPMorgan’s report, emphasizes that these conditions create a "Goldilocks" scenario where growth remains robust while inflation stays manageable. This balance allows for sustained equity performance without the risks associated with either overheating economies or deflationary pressures. For investors, this trend matters because it opens up opportunities for diversification and potentially higher returns beyond U.S.-centric markets. As global economic dynamics shift in favor of international and emerging stocks, investors may want to consider allocating more to these regions to capitalize on their growth potential. The combination of a weaker dollar, supportive monetary policies, and favorable macroeconomic conditions positions international equities as a key area for investment in the coming year.

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Originally published on MarketWatch on 2/23/2026