The second-quarter reporting season likely marked the trough in year-over-year earnings growth, and guidance for the third quarter was positive. We therefore now expect S&P 500 earnings per share to be flat in 2023 and rise 9% in 2024. Our base case is for the index to reach 4,500 in December and 4,700 in June next year.

Despite the receding risk of a recession in the US, we still only see a modestly higher profile for equities over the next six to 12 months, in our base case. Against this backdrop, we continue to favor equity market laggards whose valuations are lower and have scope to catch up.