3 surprising market winners in 2025
Investors brave enough to peek at their account statements know that it's been a rocky 2025.
Even before tariff-related volatility, DeepSeek AI's launch clouded the major technology theme that powered the market in 2023 and 2024, as AI stocks entered a bear market in March.
But there have been equity gains to be had in 2025. When I look at year-to-date returns across indexes, I notice a few surprising stars: European stocks, Latin America, and real estate investment trusts.
The common thread that connects the three? All had been underperformers in prior years.
European stocks have been made great again
Morningstar's European stock index is riding high this year, as the macroeconomic environment has been improving. The financial-services sector, in particular, is a key beneficiary.
Then there's Germany's newfound interest in deficit spending and the continent's focus on military self-sufficiency, spurred by the Donald Trump administration.
US tariff announcements caused sharp selloffs in Europe, but the recovery has been V-shaped. A weakening US dollar has magnified European equity gains for unhedged US investors. It doesn't hurt that the European Central Bank and the Bank of England have actually been cutting interest rates.
My research and investment colleagues have called Europe 'the most attractive developed-markets region globally,' making European stocks worthy of inclusion in a diversified portfolio.
Latin America: Can the revival last?
South of the US border, stocks are rallying.
Morningstar's Latin American equities index is up more than 22% so far in 2025, thanks to Brazil, Mexico, and the smaller markets of Colombia and Chile. Here, too, a weakening dollar has boosted equity returns for unhedged US investors. This marks quite a turnaround from losses of more than 25% in US dollar terms in 2024.
Brazil, for its part, faces serious fiscal challenges. In Mexico, sentiment was dented by election results on both sides of the border.
Coming into the year, my colleagues on Morningstar's research and investment team identified Brazil as the highest potential global equity market for the coming 10 years. Latin American stocks are volatile but could hold more upside.
REITs, especially those outside the US, outperform
Real estate investment trusts are also up double digits this year outside the US. Property sectors in many geographies are vibrant, bolstered by low or falling interest rates.
What about the US? The Morningstar US REIT Index is well behind the Morningstar Global Markets ex-US REIT Index in 2025, but it's in positive territory, ahead of the broad US equity market. US interest rates that appear to be staying higher for longer are seen as a negative for real estate. That said, REIT yields are attractive, and property is a 'real asset' that can act as an inflation hedge.
Diversification assures exposure to unloved asset classes
US mega-cap technology-oriented stocks did so well for so long that many investors thought they were the only game in town. Coming into 2025, it was hard to envision how the Magnificent Seven could ever be knocked off their perch. The rise of artificial intelligence, widely viewed as 'bigger than the internet,' seemed inexorable. No one saw DeepSeek AI coming, and few predicted the degree to which tariffs would disrupt.
Monday Mornings
The latest local business news and a lookahead to the coming week.
Gravity is a powerful force in investing, too. US stocks, especially on the growth side of the market, posted returns in 2023 and 2024 that far exceeded their historical levels. Their losses in 2025 can be seen as a reversion to the mean, or a return to long-term averages.
The surprising winners of 2025 show that investment performance is dynamic. Contrarian bets can be profitable, though they can also take time to pay off. Investors who diversify by geography, style, and market capitalization are also well placed to benefit from leadership change.
___
This article was provided to The Associated Press by Morningstar. For more markets content, go to https://www.morningstar.com/markets.
Dan Lefkovitz is a strategist for Morningstar Indexes
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Globe and Mail
24 minutes ago
- Globe and Mail
Why AST SpaceMobile Stock Is Skyrocketing This Week
Shares of AST SpaceMobile (NASDAQ: ASTS) are moving higher this week, up 33.9% as of 2 p.m. ET from last Friday's close. The gain comes as the S&P 500 gained 1.5% and the Nasdaq-100 gained 2.2%. Earlier in the week, a board member posted a picture to social media that fueled speculation of a possible partnership with Jeff Bezos' Blue Origin. The stock also received a boost after yesterday's public spat between President Donald Trump and Elon Musk. A possible partnership After Bezos visited the company's Texas headquarters, AST board member Adriana Cisneros posted a picture of Bezos, AST CEO Abel Avellan, and herself to Instagram with the caption, "Amazing things are happening at AST & Science + Blue Origin." This fueled speculation that Blue Origin, Bezos' space exploration company, could be looking to create a closer relationship with AST. The company already has a contract with AST to launch 45 satellites, but a more formal partnership would be a game changer for AST SpaceMobile. Musk and Trump fall out Elon Musk and President Donald Trump escalated a public spat yesterday. What began when Musk took to X to criticize Trump's flagship "Big, Beautiful Bill" quickly turned personal and included Trump threatening to cancel contracts with Musk's SpaceX. If this were to happen, it could leave the door open for AST SpaceMobile to, at least partially, fill the void. This is all speculation; nothing is concrete. That being said, both of these possibilities represent a huge upside for AST. For investors with a high risk appetite, AST can be a solid pick. However, be aware that there is a significant risk. The company has a long way to go to justify its valuation. Should you invest $1,000 in AST SpaceMobile right now? Before you buy stock in AST SpaceMobile, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and AST SpaceMobile wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $674,395!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $858,011!* Now, it's worth noting Stock Advisor 's total average return is997% — a market-crushing outperformance compared to172%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of June 2, 2025
Global News
27 minutes ago
- Global News
U.S. ambassador says Canada, U.S. goals on economy align
U.S. President Donald Trump's goal of enhancing American power aligns with Prime Minister Mark Carney's aim of making Canada's economy the fastest-growing in the G7, Trump's envoy to Canada said Friday. 'It's going to continue to be a very strong and friendly relationship,' Ambassador Pete Hoekstra told The Canadian Press in an interview Friday, adding the two leaders are in frequent contact. 'You've got two leaders that are invigorating and transforming their economies, to benefit the people of the U.S. and the people of Canada.' Hoekstra insisted there is no 'discrepancy' between his calls for win-win economic arrangements between Canada and the U.S. and Trump's repeated claim that America doesn't need Canadian imports and doesn't want Canadian-made cars. 'There is absolutely no discrepancy between me and the president. The president clearly is the decision-maker,' he said. Story continues below advertisement Though he said the U.S. intends to continue imposing tariffs on imports from multiple countries, including Canada, he argued there's room to resolve irritants in the economic relationship. 'The president is … saying tariffs are part of our new framework. That's not a Canadian problem. That's a global issue,' he said. 'The great thing is you've got the top leaders involved in the discussions, which means that both countries view this as being important, serious, and they want this to get resolved.' Get breaking National news For news impacting Canada and around the world, sign up for breaking news alerts delivered directly to you when they happen. Sign up for breaking National newsletter Sign Up By providing your email address, you have read and agree to Global News' Terms and Conditions and Privacy Policy He said the fact that Trump and Carney have been engaging in private talks that haven't been leaked to the media indicate a mutual focus on making progress. He also insisted the talks aren't happening in secret, although neither side has released readouts reporting on the content of the meetings. 8:09 Exclusive: New U.S. Ambassador has a special tie to Canada 'I don't think the president or the prime minister are going to put out a statement every time that, 'Oh, I texted the president last night, and he responded,' or you know, 'We had a five-minute call,'' he said. Story continues below advertisement 'Everybody knows that right now, tariffs, economic growth and these types of things are the top of the agenda. That for the prime minister being the No. 1 growing economy in the G7 is one of his goals and objectives, and knowing that our President Donald Trump is doing everything that he can he can to ignite the U.S. economy. 'Why is anybody surprised that there may be different levels of communications going on to make that happen?' Hoekstra admitted he isn't informed every time Carney and Trump talk. 'I'd be interested in knowing exactly how often it's happening. I don't need to know,' he said. 'There (are) multiple channels between key decision-makers that are open and are being used, but I don't need to know the quantity or the frequency. I just need to know that they exist, because that tells me that we can be making progress.' Hoekstra did not offer a timeline for trade talks as discussions continue between Ottawa and Washington on tariffs and a possible early start to a review of the North American trade deal this fall. The ambassador said Trump, Carney, U.S. Commerce Secretary Howard Lutnick and various Canadian ministers are negotiating with advice from businesspeople on both sides of the border. 'They all understand that great negotiations, great discussions, end with a win-win,' he said. Story continues below advertisement Hoekstra said America wants strong borders, an end to fentanyl deaths and sustainable spending, and said Canada can partner with the U.S. on shared security and prosperity. 'Our objective is to stay the most powerful country in the world,' he said. The ambassador said he's had a warm reception in Canada, despite the tensions in the relationship that he had been reading about in the six months leading up to the start of his posting in April. 'I knew that there was a tension, a different tone and tenor than what we normally expected from our northern neighbours,' he said. 'But you know, we're going get past this.'
Winnipeg Free Press
42 minutes ago
- Winnipeg Free Press
Political tensions real, but when chips are down Canadians, Americans show up for each other
It's an odd contradiction. One day, we're in a full-blown trade war with the United States, boycotting American whiskey and throwing around retaliatory tariffs like poker chips. The next, we're welcoming U.S. firefighters with open arms to help battle raging wildfires in northern Manitoba. This is Canada-U.S. relations in 2025. On one hand, we have tit-for-tat tariffs on steel, aluminum, lumber and other goods. On the other, we have boots on the ground — Americans working shoulder to shoulder with Canadians, risking their lives to protect our communities from natural disaster. American fire crews prepare to leave the University of Manitoba in Winnipeg, Thursday morning to help battle the province's wildfires. (Province of Manitoba) It's a jarring contrast, but it reveals something deeper about the true nature of our relationship with our neighbours to the south: when push comes to shove, ideology takes a back seat to humanity. Let's rewind. When President Donald Trump reignited his tariff playbook earlier this year — slapping duties on Canadian imports ranging from paper products to maple syrup — Canada responded in kind. Ottawa announced retaliatory tariffs, and province, including Manitoba, didn't hold back. In a highly publicized move, Manitoba Liquor & Lotteries announced it would no longer stock American-made alcohols, including some popular Tennessee bourbons and California wines. The ban remains in effect. There's been a wave of similar symbolic boycotts across the country. Cities are pulling back from U.S. construction contracts. Local officials are urging consumers to 'Buy Canadian.' Many Canadians are refusing to vacation in the U.S., even for weekend getaways. Nationalism has found a new rallying cry. And who can blame them? Trump's America-First approach has always played well with parts of the Republican base, but it comes at a cost to long-standing trade partners, such as Canada. Jobs are at risk. Exporters are left scrambling. And everyday consumers are caught in the crossfire. But just as the rhetoric ramps up in press conferences and policy briefings, something remarkable unfolds on the ground. As fires raged across northern Manitoba in recent weeks, threatening dozens of communities and displacing more than 18,000 people, Canada could rely on its old friend — the United States (and others) — for help. Approximately 100 firefighters and 25 managerial or support staff from the U.S. arrived Thursday to help extinguish the flames. About 110 more American firefighters are expected next week. No conditions. No political games. Just help. It's not the first time, of course. Canada and the U.S. have a long history of mutual aid during wildfires, floods and other natural disasters. The agreements are baked into our shared protocols and border pacts. They're largely immune to whatever political storm is brewing in Washington or Ottawa at the time. When the Fort McMurray fires devastated Alberta in 2016, for example, American crews came north. Canadian crews returned the favour during catastrophic wildfires in California. This is what neighbours do — they help each other in times of crisis. What this juxtaposition reveals is a deeper truth often lost in the political noise: real people — firefighters, volunteers, displaced families — don't live their lives according to tariff schedules or party platforms. When disaster strikes, ideology melts away. What matters is compassion, co-ordination, and trust. The people fighting fires in northern Manitoba don't care whether their counterparts voted Democrat or Republican. They care about containing the blaze, saving homes and making sure everyone gets out safely. That kind of co-operation can't be legislated or sanctioned. It comes from a bond far deeper than economics or trade agreements. It's rooted in a shared history, a cultural closeness and the lived experience of two nations that, for better or worse, are joined at the hip. So where does that leave us? We're clearly in a period of strained political relations with the U.S., fuelled by the unpredictable and narcissistic behaviour of a deranged American president. Trade fights are real, and the consequences affect livelihoods from places such as Winnipeg and Flin Flon. Wednesdays Sent weekly from the heart of Turtle Island, an exploration of Indigenous voices, perspectives and experiences. But let's not let the politics define the entire story. Because on the ground, when lives are on the line, the Canada-U.S. relationship still works. In fact, it thrives. Maybe we should take a page from our own emergency playbook. If we can collaborate so effectively during wildfires — sharing resources, respecting protocols and trusting each other's expertise — why can't we bring that same spirit to trade talks and economic policy? It's tempting for politicians to rally around a common enemy, especially when that enemy is conveniently located just south of the border. But the real world is messier. The same country that imposes unfair tariffs is also the one helping douse the flames in our backyard. In the end, maybe the best measure of a relationship isn't found in balance sheets or tariff lists. Maybe it's found in the way people show up for each other — when it really counts. Tom BrodbeckColumnist Tom Brodbeck is a columnist with the Free Press and has over 30 years experience in print media. He joined the Free Press in 2019. Born and raised in Montreal, Tom graduated from the University of Manitoba in 1993 with a Bachelor of Arts degree in economics and commerce. Read more about Tom. Tom provides commentary and analysis on political and related issues at the municipal, provincial and federal level. His columns are built on research and coverage of local events. The Free Press's editing team reviews Tom's columns before they are posted online or published in print – part of the Free Press's tradition, since 1872, of producing reliable independent journalism. Read more about Free Press's history and mandate, and learn how our newsroom operates. Our newsroom depends on a growing audience of readers to power our journalism. If you are not a paid reader, please consider becoming a subscriber. Our newsroom depends on its audience of readers to power our journalism. Thank you for your support.
