JPM Europe Equity Research | Today’s Morning Meeting

Europe First to Market 03 August 2026

Today’s Morning Meeting | Also Published Today | Key Changes | JPM Events | Upcoming Earnings

Today’s Morning Meeting Equity Strategy (Mislav Matejka, CFA)

August Chartbook: Stay constructive - the downside risk from momentum unwind is fading; Fed unlikely to create problems; Keep using the dips driven by geopolitics to add

Our bullish equities call for this year was based on resilient activity, strong earnings momentum and likely no de-anchoring in inflation expectations, among other things. We believe that main positives are still tracking. In addition, we have in the past two months called for a rotation and broadening in market leadership, from what was an exceptionally narrow participation in Q2. It is very much reassuring that despite the material unwind in momentum factor, global equity indices – MXWO, SPX, SXXP etc – are all within 1-2% of all-time highs. We stay with the view that Tech/AI is unlikely to be the dominant driver of returns in 2H, in contrast to 2025, and are looking for continued broadening. Having said that, we argued in our last weekly that the main chunk of momentum derisking was likely behind us, and that the group should stabilize. We have also consistently argued since the second half of March to use any equity weakness brought on by the Iran conflict to buy into. The flare-ups are continuing, but the impact on oil might become more muted, supply is likely to be structurally higher, and if one joins selling during derisking episodes, one risks being whipsawed on any favourable headline. Additionally, while the market might be anxious about it, we suspect that Fed will aim to be as accommodative as possible, which could result in lower bond yields down the line, or in lower USD, either of which would be a support for equities, especially if the yield curve is steepening at the same time. Equities and USD tended to show an inverse correlation, and curve steepening has historically favoured Cyclicals. At the overall equity level, we look for fresh highs in 2H. Notably, non-US stocks are faring well, ahead of US for a second year in a row. Encouragingly, Eurozone CESI is at fresh highs, credit growth and car sales have been rebounding, PMIs are up for two months in a row, as are EPS revisions. We believed that Low Vol bounce seen in the past weeks will be only tactical, and will not spill over much into 2H. We expect continued market broadening, Value, small caps and Cyclicals leadership from here. Japanese Banks show more upside, and the Miners have opened up again a cushion with metal prices, offering an improved risk-reward.

DSM-Firmenich (Chetan Udeshi, CFA) (DSFIR NA, UW)

Strong 2Q/July colour drives upgrades; unwind risk may be delayed, not eliminated

DSM-Firmenich (DSFIR) delivered a solid 2Q print with organic sales growth (OSG) of +6% YoY and adj EBITDA up 10% YoY organic. The broad-based nature of growth across divisions suggests actions to re-invigorate growth alongside a tighter cost focus may be starting to bear fruit. Management also highlighted a strong June and a good July, which the market read as reassuring. That said, the year started slow (likely 2-3% OSG run-rate) and the acceleration in 2Q post the ME conflict, against a backdrop of mixed end market datapoints with no clear, material, broad-based demand inflection, leaves us less confident the step-up is fully sustainable. Management also referenced demand bumps in March (early conflict) and again in June (as tensions appeared to ease), reinforcing our view of choppy, low-visibility demand. Further, the 2H26 guide implies a meaningfully stronger margin trajectory than the last four years, which could be at risk if destocking emerges. We upgrade ests on better June/July trading than our previous cautious 3Q ests, but still bake in a moderation versus the 2Q/1H run-rate (and remain below consensus) given the risk the uplift is temporary and any unwind is delayed rather than avoided. We raise 3Q26E

EMEA Equity Research AC Europe Equity Research ( August 2026 JPMORGAN

OSG to +3% (from +1%) and FY26E OSG to +4% (from +3%) while keeping FY27/28E OSG unchanged at +3%. We raise FY26/27/28E adj EPS by…