US Perspectives: US Equity Monthly

Highlights: US equities have continued to lead global markets since the April 2025 trough, supported by resilient consumer spending, solid corporate balance sheets, and strong earnings delivery. Q4 2025 and full year-2026 earnings expectations have continued to move higher. We maintain our mild overweight positioning on US equities as the US remains well positioned to benefit from innovation-led growth and continued corporate investment. 

• The AI investment cycle is increasingly translating into tangible economic activity, particularly through large-scale data center construction, power grid upgrades, and related infrastructure investment
• According to FactSet, as of 23rd January, the current estimated earnings growth rate for the S&P 500 in Q4 is 8.2 per cent, which would mark this the 10th consecutive quarter of year-over-year earnings growth. Given the historical tendency for companies to report earnings above expectations, this estimate likely understates the final outcome. Even if we use the most conservative historical improvement across these periods, the S&P 500 is likely to report at least 14 per cent year-over-year earnings growth for Q4, marking the fifth consecutive quarter of double-digit earnings growth
• The combination of lower policy rates and the end of quantitative tightening (QT) provides a more supportive financial backdrop for risk assets. Lower policy rates are accretive to corporate earnings and should help keep valuations in check. Technology, AI, and productivity-linked sectors stand to benefit from lower real yields and improving macro conditions, where we maintain our preference
• The One Big Beautiful Bill Act, taking effect in 2026, introduces an array of permanent tax cuts, new deductions, and pro-investment incentives that materially improve the fiscal and regulatory landscape. These measures meaningfully support household disposable income, corporate cash flow, and capital formation across manufacturing, semiconductors, and infrastructure