JPM Equity Strategy Q3 P

J P M O R G A N Global Markets Strategy 12 October 2026

Equity Strategy Q3 Preview: Earnings delivery to reassure

• Q3 reporting season is about to start. Given the increased volatility in the past Equity Strategy weeks on a number of fronts, a lot is at stake. We find that investors in general Mislav Matejka, CFA AC have a constructive view on earnings, but are concerned that actual results might ( underwhelm. We believe that earnings will be a support for the market. J.P. Morgan Securities plc • Consensus expectations might appear elevated at face value, but we do not Prabhav Bhadani, CFA believe that to be the case. For S&P500, consensus Q3 EPS growth projection ( is at 24% according to IBES. Factset & Thompson Reuters are at 30%, but that is due to Meta's one-off tax charge adjustment. Ex-Nvidia and Micron, the J.P. Morgan Securities plc hurdle rate falls to 15%, from 24%. If we look at median S&P500 stock, the yoy Nitya Saldanha, CFA Q3 EPS growth forecast by consensus drops further, to 8%. ( • European consensus EPS growth projection stands at 19%. Ex Energy, this J.P. Morgan Securities plc comes down to 11%, and median is at 9%. Looking at revenue growth, the Karishma Manpuria, CFA median for SXXP is at 7% for Q3, with S&P500 also at 7%. ( • Importantly, global PMIs have accelerated during the quarter to multi-year J.P. Morgan India Private Limited highs, and are projecting a strong EPS delivery - top chart. Our lead indicator of earnings is staying on an uptrend, not showing an inflection yet Anamil Kochar, CFA ( - middle chart. It typically has a 2 quarters lead-lag, suggesting the next 2 reporting seasons at least should be positive. J.P. Morgan India Private Limited

• AI continues to do the heavy lifting for the US. At the same time, earnings strength is broadening. The proportion of global equity market constituents The acceleration in global PMIs during Q3 to multi-year that are showing accelerating earnings has climbed to near record highs. This highs is calling for strong, double digit, EPS growth… should improve the odds of the upcycle being more sustainable. For Europe, 80% 81%

margin expansion is doing the heavy lifting. This year European EBIT/Sales 60% 54%

are projected to be at 14.4%, 250bp higher than pre-Covid, in 2019. All the 40%

13%13% 13% 14% 15% 30% 30%24% 23% 54 19%

9% 9% 9% 9% 6% 9% 7% 9% 5% 9% 8% 10%

sectors are stepping up, apart from Staples, Autos and Software. 9% 6% 8% 7% 6% 5% 3% 2% 4% 2% 3% 1% 1%2% 1% 2% 1% 52 0% 0% 0% -1% 0% -2% -1% -5% -3% -2% -5% -4% -8% -8% -6% -8% -8% -8% -8% -12% 50 -20% -16% -16%

• Weakening Euro will turn into a support for Exporters. Energy is likely to -20% -26%-25% -27%

-40% 48 1Q '16 3Q '16 1Q '17 3Q '17 1Q '18 3Q '18 1Q '19 3Q '19 1Q '20 3Q '20 1Q '21 3Q '21 1Q '22 3Q '22 1Q '23 3Q23 1Q '24 3Q '24 1Q '25 3Q '25 1Q '26 3Q '26e

surprise on the upside, but Miners pose a risk, and broader China exposure could S&P500 EPS Growth, %yoy Stoxx600 Global composite PMI (rhs)

stay soft, as well as consumer exposure, with companies likely to highlight the ...our lead indicator of earnings, which tends to lead by 1-2 quarters, is not inflecting yet… headwind of rising energy costs. Semis are poised to deliver strong results, along with Industrials. Banks have derated 10%+ in the past weeks, but are on track 80% 80%

to see reassuring earnings. If the reporting season coincides with a peaking in 60%

bond yields risk, together with stabilisation in credit spreads, then Banks should 20%

be set to recover. Utilities results are also likely to be positive. -20% -20%

• French exposure remains hostage to bond yields direction. Having said that, -60% MSCI AC World 12m Forward EPS, %y/y Taiwan export orders, %y/y, (brought forward by 6 months) - rhs -60%

French plays have derated 15%+, in contrast to earnings which show ...while CAC40 fortunes will be driven by yields moves, resiliency, given that activity indicators such as PMIs held up so far, and CAC40 we note a gap opening up between earnings and stocks price relative, which did not tend to last topline is 75% non-French - bottom chart. 15%

• Overall, we have been arguing that when the Q3 results season starts, the 10%

market focus will shift…