Wall Street’s “American exceptionalism” trade has been shattered in recent weeks as mounting political uncertainty over Donald Trump’s tariffs, the economic outlook and geopolitics have fuelled an unusually prolonged and deep twin sell-off in the US dollar and equities.
The greenback has lost 4 per cent against a basket of six peers so far this year, while the blue-chip S&P 500 has tumbled almost 4 per cent.
Such large and persistent falls in Wall Street stocks and the currency are unusual, with these types of episodes occurring only a handful of times over the past 25 years, according to research by investment bank Goldman Sachs. The declines mark a reversal from recent years, when bets that America’s economy would outperform peers triggered a clamour for US financial assets at the expense of other major markets.