Wall Street Watches As Money Flows Out Of US Markets — Is The 'Great Rotation' Here?

The global market is witnessing a significant shift in investor sentiment, with a notable move away from U.S. assets. This trend, a phenomenon that cannot be solely attributed to a weakening dollar, as per a report by Société Générale.

What Happened: The shift in market leadership, with international stocks outperforming their U.S. counterparts, has sparked a debate on Wall Street. Some are wondering if this is a temporary phase or a sign of a longer-term trend, reported MarketWatch

Arthur van Slooten, a strategist at Société Générale who monitors fund flows, believes that the current shift could be the start of a significant rotation, which is in its early stages.

“..clear confirmation that the great rotation has started,” he shared with the publication.

van Slooten’s analysis of recent fund flows from ETFs and mutual funds revealed five key observations. Europe has emerged as the preferred destination for investors, with equity inflows nearly double that of the U.S. Global developed-market funds have also seen nearly twice the level of inflows compared to U.S. direct funds.

Emerging markets are making a strong recovery, with China-focused funds attracting $11 billion in inflows. Although the weakening U.S. dollar has played a role in this resurgence, van Slooten emphasizes that it’s not the only factor driving the shift. Meanwhile, despite the U.S. having a larger credit market, investors have recently shown a preference for European credit funds.

van Slooten further noted that rising geopolitical tensions could mean that this shift away from U.S. assets is just starting.

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Why It Matters: The shift away from U.S. assets has been observed for some time now. In March 2025, data showed that the European stock market outperformed, hence there was a flow of money out of the U.S. stock market and into Europe. This was seen as a period of ‘transition,’ as per President Donald Trump, with investors seeking opportunities in European markets.

In April 2025, foreign investors dumped $6.5 billion worth of U.S. equities in a week, marking the second-largest amount on record. This was attributed to the turmoil in U.S. equity markets and tariff-related uncertainties.

• READ MORE: Over 200 Central Banks Reportedly Dump $48 Billion In US Treasuries Amid Concerns Over Dollar’s Stability: ‘The Drop Is Unusual’

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.