Are EAFE Stocks Coming Back?

Igor Manukhov - Feb 26, 2025

EAFE (Europe, Australia, Far East) stocks are starting to outperform North America. Too early to act, but worth keeping an eye on.

Going through my chartbook, I noticed that international markets have made a strong comeback against North American stocks since December. The chart below shows two relative strength lines: the black line compares EAFE stocks against Canadian stocks, while the red line compares EAFE against US stocks. As you can see, both lines recently experienced a nice rally.

It is too early to act, as the longer-trend remains downward – meaning North American stocks continue to outperform EAFE over a longer timeframe. However, we may be witnessing a turnaround. I will need to see more relative strength out of EAFE, enough to reverse the longer-term trend (30-week moving average represented by a blue line).

Time will tell if it materializes, but I wanted to share this finding.