Highlights: We remain overweight on US equities as earnings resilience, AI leadership, improving market breadth, and stronger 2026 earnings expectations continue to support the US market, even as valuations remain above long-term averages. If AI and automation adoption continues to rise and improve efficiency, this could help sustain margins and long-term profitability, particularly for high-quality US companies with strong balance sheets and earnings visibility.

• US equities delivered solid first-half gains in 2026, with the S&P 500 up 9.6 per cent YTD, the Nasdaq up 12.8 per cent, and the Dow Jones up 8.9 per cent, despite a more mixed performance in June
• June showed signs of improving market breadth, as the Magnificent 7 declined by -8.9 per cent, while the “Forgotten 493” rose 3.0 per cent and the Russell 2000 gained 3.6 per cent, suggesting leadership is becoming less concentrated
• Valuations have reset since the start of the year, particularly in Technology, where the sector’s valuation premium to the S&P 500 has compressed from 10.7x at the start of 2026 to 4.1x today
• The 2Q earnings backdrop remains strong, with FactSet expecting 23.3 per cent year-on-year EPS growth for the S&P 500 and analysts raising earnings estimates by 3.4 per cent since the start of this quarter
• The 2026 earnings outlook has improved meaningfully, with full-year S&P 500 EPS growth now expected at 24.2 per cent, up from 17.1 per cent at the end of March and 14 per cent at the beginning of the year
• Earnings growth is broadening, with “Forgotten 493” EPS growth expected to accelerate from 6.2 per cent in 4Q25 to 26.3 per cent in 4Q26, helping reduce the market’s reliance on the Magnificent 7