Earnings resilience continues to support global equities, with JPMorgan maintaining a positive equity outlook
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Earnings resilience continues to support global equities, with JPMorgan maintaining a positive equity outlook
The report believes that 2026 earnings forecasts continue to be revised upward across major regions, Q1 results are likely to be better than market fears, and investors should add to equities on conflict-driven pullbacks.
- US 2026 EPS growth forecast was raised from +16% to +19%, while Eurozone was raised from +15% to +18%.
- The headline +18% 2026 EPS growth in the Eurozone is mainly driven by the low base in Consumer Discretionary; the median growth rate is about +8%, so the hurdle is not high.
- During the Q1 earnings season, most US and European companies are about to report, and PMI and guidance data point to resilience in earnings delivery.
- Semis, Mining, Industrials, and Banks are viewed as likely to deliver relatively positive results; Consumer Discretionary faces near-term pressure but may improve in 2H.
- The report advises against following the mainstream bearish view, arguing that position rebuilding and earnings resilience can provide further momentum for the equity market rebound.
Report interpretation
Overview
This is a JPMorgan global equity strategy report focused on the Q1 earnings preview and earnings resilience. The report points out that despite the market's relatively bearish narrative around geopolitical conflict, oil prices, and stagflation risks, 2026 earnings forecasts in major regions are still being revised upward, and the corporate earnings backdrop has not deteriorated. The authors maintain a positive equity outlook, believing that earnings delivery, post-oversold position rebuilding, and improvement in some cyclical sectors will jointly support equities.
Core views
The core views include: first, 2026 earnings forecasts continue to be revised upward in major regions such as the US, Eurozone, and EM, and the upward revisions are not coming only from Energy, as multiple sectors including Tech, Financials, Utilities, Materials, Semis, Retail, Mining, and Banks are also contributing. Second, market concerns over +18% EPS growth in the Eurozone are exaggerated by the low-base effect, with the median +8% better reflecting the actual hurdle. Third, the Q1 earnings season is highly likely to deliver reassuring results, especially as activity indicators and guidance data are better than bearish expectations. Fourth, Semis, Mining, Industrials, Energy, and Banks are more resilient in the short term, while Consumer Discretionary faces short-term pressure but may catch up in 2H. Fifth, investors should not turn excessively bearish after pullbacks, as position rebuilding may extend the equity market rebound.
Analysis framework
The report uses a top-down equity strategy framework, combining earnings forecast revisions, regional EPS growth, sector contributions, PMI activity indicators, guidance data, oil prices and energy profits, cyclical/defensive style rotation, positioning, and technical oversold indicators to assess the Q1 earnings season and the medium-term direction of equities.
Methodology notes
Track changes in 2026 and 2027 EPS forecasts relative to the start of the year
By comparing changes in EPS forecasts across the US, Eurozone, EM, and sectors, the report assesses whether earnings expectations are still improving.
Use PMI and relative PMI to assess the probability of earnings delivery
The report believes that current PMI levels broadly match US Q1 expectations and imply the possibility of upside earnings surprises in Europe.
Combine RSI oversold signals and positioning Z-scores to assess rebound momentum
The report believes that the market showed oversold signals after March 23, many investors were forced to turn bearish at low levels, and subsequent position rebuilding will support the rebound.
Asset mapping & comparison
Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).
- Global equitiesCore bullish asset
- Strengths
- Upward earnings revisions, resilient earnings delivery, and position rebuilding may extend the rebound.
- Weaknesses
- Geopolitical conflict and oil price volatility may still cause short-term downside.
- Comparison
- The report believes that compared with the market's mainstream bearish narrative, equity fundamentals are more resilient.
- Risks
- Conflict escalation, a sustained and significant rise in oil prices, and renewed central bank tightening expectations.
- SemiconductorsRelatively positive sector
- Strengths
- Strong earnings momentum, continued outperformance in Europe Semis relative EPS support, and Tech leading EPS upgrades in EM.
- Weaknesses
- Valuation and cyclical expectations may already reflect some of the positives.
- Comparison
- Compared with Consumer Discretionary and Luxury, semiconductors have stronger earnings revisions.
- Risks
- Slowing global demand, weaker capex, and geopolitical supply-chain disruptions.
- MiningRelatively positive sector
- Strengths
- If conflict eases, metal prices and earnings should remain supported.
- Weaknesses
- Current conflict and the energy crisis are weakening market confidence in metal prices.
- Comparison
- Compared with Energy, Mining depends more on cyclical demand recovery after conflict easing.
- Risks
- Falling metal prices and weakening global industrial demand.
- Industrials / Capital GoodsRelatively positive sector
- Strengths
- Growth has broadened after Q4, with improvement in discrete automation in China, the US, and the EU, and capex trends continue to provide support.
- Weaknesses
- Sensitive to macro activity and the investment cycle.
- Comparison
- More likely than defensive sectors to benefit from cyclical earnings upside.
- Risks
- Slower capex and weakening industrial production.
- Consumer DiscretionaryCautious in the short term, potential improvement in the medium term
- Strengths
- May benefit in 2H from easing geopolitical uncertainty and consumer-support policies.
- Weaknesses
- Q1 figures may be mixed, guidance may be soft, and Luxury earnings have been materially revised down over the past year.
- Comparison
- Weaker than Semis, Mining, and Industrials in the short term, but may become the final leg of catch-up in cyclical sectors.
- Risks
- Weak consumer confidence, pressure on real incomes, and less-than-expected policy support.
- EnergyShort-term support, long-term recommendation to lock in gains
- Strengths
- Current earnings may be significantly better than forecasts, and Brent around $100 can still coexist with earnings upside.
- Weaknesses
- Medium-term momentum may weaken, and the report recommends using short-term strength to lock in gains.
- Comparison
- Short-term earnings support is stronger than in most sectors, but long-term risk-reward is less attractive than in some cyclical recovery sectors.
- Risks
- Falling oil prices and a decline in the energy risk premium as conflict eases.
- BanksResilient sector
- Strengths
- Loan growth continues to rise, Q1 results may be solid, and this may help repair relative weakness since the start of the year.
- Weaknesses
- Sensitive to the rate path, credit quality, and macro growth.
- Comparison
- Shows earnings resilience within Financials, but market performance is still affected by rate expectations.
- Risks
- A reversal in rate expectations, rising credit risk, and regulatory pressure.
Key data
- US 2026 EPS growth forecast+19% y/yRaised from +16% in January.
- Eurozone 2026 EPS growth forecast+18% y/yRaised from +15% in January; the headline growth rate is affected by the low base in Consumer Discretionary.
- Eurozone 2026 EPS median growth+8% y/yThe report believes this is a more reasonable hurdle, with room for upside surprise.
- Q1 2026 Europe EPS forecast+3% y/y+1% y/y excluding Energy.
- Q1 2026 US EPS forecast+13% y/y+14% y/y excluding Energy.
- Q1 2026 US sales growth forecast+10% y/y+7% y/y at the median level.
- Q1 2026 Europe sales growth forecastroughly flat+1% y/y at the median level.
- Positive earnings guidance for the S&P 500Highest in 5 yearsThe negative/positive guidance ratio declined, and initial results were better than consensus.
- Share of S&P 500 companies already reportedBelow 10%Early reported results appear to be ahead of consensus expectations.
Impact & implications
If the report's judgment is correct, equity market declines are more likely to reflect a short-term geopolitical risk premium rather than deterioration in the earnings cycle. Upward earnings revisions and Q1 earnings delivery will provide fundamental support for global equities, and cyclical sectors may continue to take over in 2H. Investors should watch for potential rotation from defensives to cyclicals, from the US to International/EM, and from concentrated growth to value and small caps.
Risks
- Renewed escalation of geopolitical conflict, leading to a significant and sustained rise in oil prices that suppresses earnings.
- The stagflation narrative regains dominance, with activity indicators falling while rate expectations rise.
- Q1 company guidance turns soft due to geopolitical uncertainty, and investors fail to look through near-term guidance pressure as the report expects.
- Earnings downgrades continue in sectors such as Consumer Discretionary and Luxury, dragging on cyclical broadening.
- After the V-shaped market rebound, positioning repair is insufficient to drive further upside, or the positives are priced in too quickly.
What to watch
- Whether EPS and sales in US and Europe Q1 earnings releases beat expectations.
- Whether the ratio of positive to negative earnings guidance continues to improve.
- Whether Brent oil prices and calendar spreads remain elevated.
- Whether PMI, relative US vs Europe PMI, and global activity indicators remain resilient.
- The direction of earnings revisions in Semis, Mining, Industrials, Energy, and Banks.
- Whether Consumer Discretionary sees fundamental improvement and policy catalysts in 2H.
- Investor positioning Z-scores, the durability of the rebound after RSI oversold signals, and capital flow replenishment.