Schroders Equity Lens

Schroders

Research

70 Pages

Schroders reviews the global equity backdrop through earnings, stagflation risk, and sector positioning. Consensus still expects double digit EPS growth in most major markets, but rising energy prices are increasing the risk that 2026 looks more stagflationary than investors currently expect.

Key Takeaways

Earnings Expectations Stay High: Consensus expects 2026 EPS growth of about 19% in the US, 15% in Europe ex UK, and 39% in EM, showing forecasts still lean optimistic.
Stagflation Risk Is Rising: In US data from 1926 to 2025, equities roughly matched inflation on average in high inflation and low growth years, but outcomes were notably weaker.
Defensive Sectors Look Better: After major oil supply shocks, energy, consumer staples, health care, and utilities showed the strongest average relative returns over the following 12 months.
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