Welcome to RBC’s Markets in Motion podcast, recorded June 30th, 2025. I’m Lori Calvasina, head of US equity strategy at RBC Capital Markets. Please listen to the end of this podcast for important disclaimers.
Today in the podcast, the late June update of our global analyst outlook survey, which we conduct several times a year, pulling together the views of our equity analysts around the globe for US, Europe, Canada, and Australia.
Four big things you need to know:
First, globally our analysts are constructive on performance over the next 6-12 months. Second, driven in part by our survey results, we are making six changes to our US sector calls – we dig in a little deeper to the upgrades of Materials, Consumer Staples, and REITs here. Third, while we don’t make recommendations on non-US sectors, we do highlight how Financials is a favorite across the globe among our analysts. Fourth, improving 2026 consensus GDP forecasts are a positive outlier for the US compared to our other coverage regions, which we think has been helping boost US performance.
If you’d like to hear more, here’s another five minutes.
- Starting with Takeaway #1, when we look at the survey responses globally, our analysts are constructive on performance over the next 6-12 months along with current valuations and the state of demand but have a negative view on the US policy backdrop.
- Regionally, performance outlooks tilt constructive across all regions – strongest in Canada and Australia and stronger for the US than Europe.
- On valuations, views tilt constructive across regions and are the most constructive for Canada.
- On the US policy backdrop, across all regions, most sectors had negative tilts, with the most extreme, negative views for Staples and Health Care. Communication Services and Financials had constructive tilts while Energy and Utilities were neutral/mixed.
- Top US policy issues in focus were tariffs and trade, followed by deregulation.
- Moving on to Takeaway #2, driven in part by the survey results, within the US we are upgrading Materials to Overweight from Market Weight, upgrading Consumer Staples and REITs to Market Weight from Underweight, downgrading Consumer Discretionary to Underweight from Market Weight, and downgrading Communication Services and Utilities to Market Weight from Overweight.
- On the US results: Performance outlooks are most constructive for Real Estate and Materials and negative for Consumer Discretionary and Communication Services. Valuation views have a slightly negative tilt for Communication Services and, to a lesser degree, Industrials.
- Digging into our upgrades a little more:
- On our Materials upgrade to Overweight:
- It’s a top sector in the US survey results for forward performance and valuation, and we see reasonable valuations on our own quant work.
- Positive EPS revisions and inflows have also returned, and revisions may continue to get a boost from the weaker US dollar.
- We see it as a better alternative to the extremely expensive Industrials sector, where our analysts are also less constructive, if the trade war de-escalates.
- A key macro indicator to watch – the sector tends to outperform when ISM manufacturing moves higher.
- On our Staples upgrade to Market Weight:
- Our team’s neutral performance outlook moves it to the middle of the pack vs. other sectors.
- We like its attractive valuations – which we don’t see in the Consumer Discretionary sector – and note consumer funds flows have been positive.
- EPS revisions have been negative, but this could change due to USD weakness.
- Our enthusiasm is restrained by policy risk, Staples has one of the most negative views on the US policy backdrop in the survey for US sectors, along with Discretionary and Health Care.
- On our REITs upgrade to Market Weight:
- We like our analysts’ constructive view on forward performance (which ranks above all other sectors besides Materials), the positive inflows that have returned to the sector, its attractive dividend yield, and its reasonable valuations.
- Something else that catches our eye in the US survey results is a neutral view of the US policy backdrop.
- There are no changes to our other sector calls - we remain overweight Financials and market weight Energy, Health Care, Tech and Industrials.
- On our Materials upgrade to Overweight:
- Moving on Takeaway #3, when we look at the performance outlooks of our analysts for the European/UK, Canadian, and Australian sectors, Financials is a favorite across all three regions.
- Other top sectors varied a bit by region and included Industrials in Europe/UK;
- …Energy, Industrials, Real Estate and Utilities in Canada…
- and Communication Services in Australia.
- Meanwhile, as is the case in the US, Consumer Discretionary is one of the least preferred sectors outside the US.
- Something else that jumped out to us when we looked outside the US, our non-US analysts feel better about their own domestic policy setups. Our European/UK analysts are constructive on the European/UK policy backdrop, while our Canadian analysts are constructive on the Canadian policy backdrop.
- Wrapping up with Takeaway #4, in our review of macro indicators and flows by region, what stands out to us is that consensus 2026 GDP forecasts are stable outside the US, but are moving up modestly in the US, which our recent client conversations suggest has been helping to push US equity prices higher.
- Though there are some exceptions, generally what we’re seeing in our different coverage regions are range-bound interest rates, weak but stable business sentiment barometers, and weak but positively inflecting consumer confidence readings.
- On flows, weekly EPFR data indicates that flows to the US have been weak and well below the highs that were in place last fall, but not deeply negative. Europe is still seeing inflows, but these have eased from peak substantially. Flows to Australia have been slightly positive but below peak. Flows to Canada have improved.
That’s all for now. Thanks for listening. And be sure to reach out to your RBC representative with any questions.