
WHICH REGION WILL GET THE GOLD IN 2022?
Jeff Buchbinder, CFA, Equity Strategist, LPL Financial
Ryan Detrick, CMT, Chief Market Strategist, LPL Financial
Scott Brown, CMT, Technical Market Strategist, LPL Financial
The near-10% correction in the S&P 500 Index and even larger drawdown in the Nasdaq have
gotten a lot of attention this year. What hasn’t gotten as much attention—and maybe surprising to
some—is the relative resilience in equity markets outside the U.S. In our special Winter Olympics
edition of the Weekly Market Commentary, we hand out medals to the U.S., developed
international, and emerging markets. Who do we think will get the gold? Read on to find out.
U.S. HAS BEEN SKIING UPHILL
It’s been a rough start to the year for U.S. stocks with some stiff headwinds. The path of the
S&P 500 in January looked like something Mikaela Shiffrin might ski on given the steepness of
the decline with twists and turns. Fears that the Federal Reserve (Fed) might be behind the
curve in its inflation battle got most of the blame for the market selloff, while a few high-profile
earnings misses—Meta (Facebook) being the latest—have added to investors’ anxiety levels.
Meanwhile, the international equity markets have held up relatively well. The S&P 500 Index is
down 5.6% year to date, outrun by the 3.8% and 0.9% declines in the MSCI EAFE Index
(developed international equities) and the MSCI Emerging Markets (EM) Index. To assess
which regional market might come out on top at the end of the 2022 competition, we take a
look at global fundamentals, valuations, and technicals.
ECONOMIC GROWTH LIKELY TO BE A CLOSE RACE
Starting with economic growth outlooks, emerging markets may produce the fastest gross
domestic product (GDP) growth in 2022, but it could be a close finish [Figure 1].
