Diamond Hill International Strategy Q1 2025 Market Commentary

2025-06-05 15:23:00 ET

Market Commentary

International equity markets experienced broad-based gains in the first quarter, as the MSCI ACWI ex-USA Index rose by 5.23%. Northern Europe, particularly Germany, posted strong returns driven by optimism about a landmark €1 trillion defense and infrastructure spending package. This unprecedented fiscal initiative represents a marked departure from Germany’s traditional fiscal conservatism. Equity markets embraced the prospect of increased spending in the region, though bond markets reacted cautiously, with yields rising amid concerns about expanding deficits. The long-term impacts of this policy shift remain uncertain, particularly given the varying fiscal conditions across Europe, which may limit the extent to which other nations follow Germany’s path....

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