JPM Equity Strategy

J P M O R G A N Global Markets Strategy 10 August 2026

Equity Strategy Stay bullish on equities; Cyclicals are rallying past Low Vol stocks again

• We remain positive on stocks, countering numerous concerns, ranging from Equity Strategy geopolitics to inflation fears, concentration risk, cycle direction, bond market Mislav Matejka, CFA AC selloff and other considerations. We believed equity indices should be making ( fresh all-time highs in 2H - see report, and look for further upside. J.P. Morgan Securities plc • Beneath the surface, we advocated for a rotation and broadening in the past 2 Prabhav Bhadani, CFA months. We think participation should pick up further in 2H, even as we called ( in the past two weeks for momentum trade and Semis in particular to show a recovery. The derisking in the Tech space potentially was overdone short J.P. Morgan Securities plc term, and as earnings are continuing to deliver strongly, this should lead to a Nitya Saldanha, CFA rebuild of positions. Having said that, we do not expect Tech to be a clear winner ( in 2H, unlike what transpired last summer. This is both in terms of a J.P. Morgan Securities plc sustainability of a bounce, and magnitude. Increased volatility seems here to stay, and profitability concerns are likely to keep coming back from time to time. Karishma Manpuria, CFA ( • We continue to see big differences to 2022, we don’t expect much inflationary pressure to materialize, and believe central banks won’t need to become J.P. Morgan India Private Limited increasingly more aggressive. Labour market backdrop is mixed, we continue Anamil Kochar, CFA to highlight a range of datapoints suggesting sentiment over jobs is soft. This in ( turn could lead to “bad is good” equities reaction, as it negates the need for J.P. Morgan India Private Limited the Fed to worry about overheating. The wild card is if Fed gets an opportunity to turn meaningfully more dovish, which would have big implications for USD, bond yields and the shape of the yield curve. If USD is weaker, equities in Low Vol stocks had a few weeks in the sun, as we hoped general and International stocks in particular benefit. for around the mid point of the year... yet, we believed that they will not be able to mount a sustained rally… indeed, Low Vol are rolling over again, back toward • Our view was that the Q2 reporting season would be reassuring for equities, lows… which acts to stabilize the fallout from the momentum unwind. The proportion 115

of stocks beating in Q2 is materially up vs typical, with both US and Europe 110

printing 20%+ yoy EPS growth rates. Interestingly, Mag-7 EPS growth, ex one- 105

offs, dipped into negative territory vs the rest, for the first time since 2022. This 95

should aid our market broadening call. 85 Jan-26 Feb-26 Mar-26 Apr-26 May-26 Jun-26 Jul-26 Aug-26

US Low Vol basket relative to S&P500 Iran Attack

• Finally, while we started the year long Cyclicals - see our Year Ahead, two …we look for Cyclicals to resume leading in 2H, on months ago we had called for some consolidation in beta, and for Low Vol stronger earnings delivery… group to bounce - see report. Our view at the time was that the Defensives 120

recovery, including Healthcare and Staples, was likely to be only tactical, to last 110

for a few weeks, and not to spill over into 2H. 105

• We continue to believe this to be the case, and have most recently called for 90 Jan 26 Feb 26 Mar 26 Apr 26 European Cyclicals vs Defensives US Cyclicals vs Defensives May 26 Jun 26 Jul 26 Aug 26

beta to resume rallying - see our August Chartbook. If the macro outlook we Iran attack Called for Low Vol stocks to have a tactical bounce, and beta to consolidate

envisaged for 2H keeps gaining traction, that should be supportive for …the recently reopened gap between Miners and metal prices is an opportunity, and should close further equity upside, but also for more of a high beta outperformance, rather 160 15000

than Low Vol type of a leadership. We note Low Vol groups have rolled over 150

again, with Healthcare and Staples trading down recently. 130

• Strong earnings uplift for Cyclicals is a support, in addition to most activity 100

indicators moving higher…