Investors spy the dawn of a tectonic shift away from US markets

LONDON, March 5 (Reuters) - A historic global trade war, a proposed $1.2 trillion European fiscal bazooka and the emergence of China as tech race leader are upending global flows of money, marking a potential turning point for investor capital away from the United States.

China unlocked more stimulus on Wednesday and promised greater efforts to cushion the impact of an escalating U.S. trade war. Hours earlier, Germany's likely next government agreed on the biggest overhaul to fiscal policy since the country's reunification.

Meanwhile, U.S. economic data points to a weakening, and the trade war unleashed by U.S. tariffs that kicked in this week is hurting sentiment inside and outside the world's biggest economy. For most of the last three years, investors had bet on "U.S. exceptionalism," with the country ahead of others in economic growth, stock prices, artificial intelligence and other areas.

"The world now sees the U.S. model is changing, and saying - we need to adapt to that, the U.S. is no longer as reliable as a trade partner, we have to take care of our own needs on defence," said Tim Graf, head of macro strategy for EMEA at State Street Global Markets.

The change in sentiment has fuelled a rare divergence in global stock markets.

While the S&P 500 stock index is down 1.8% this year (.SPX), opens new tab, European shares are up almost 9% (.STOXX), opens new tab at a record high, and tech stocks in Hong Kong have surged almost 30% (.HSTECH), opens new tab.

The euro shot to a four-month high above $1.07 and a number of banks have raced to ditch their recent calls for a drop to parity against the dollar.

Investors have chopped their bullish bets on the dollar in half to around $16 billion since U.S. President Donald Trump's ina...
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