Brendan McDermid/Reuters
- The economic recovery in the US has helped domestically focused stocks outperform.
- But according to Goldman Sachs, companies with higher global exposure are more promising.
- A weaker dollar and improving trends overseas means stocks with international exposure will thrive.
- See more stories on Insider’s business page.
Market leadership has flipped from US-focused stocks to international stocks and back again in the last 14 months, and Goldman Sachs says the baton will soon get passed once more.
The US reopening trade has been a powerful catalyst for domestically oriented stocks thanks to the strength of the economy and the speedy vaccine rollout. But Chief US Equity Strategist David Kostin says that potential is increasingly priced in.
“Stocks with high domestic sales exposure will likely lag those with high foreign sales exposure during the coming months as the pace of global economic recovery surpasses that of the US,” he wrote in a note to clients.
That’s how the market looked for much of 2020 after the COVID crash, although the effect faded this February as the US economy regained strength. But Kostin says that’s now priced in, to an extent.
“The structural decline of the US dollar and the acceleration of global growth…
