Value Sectors and Non-US Markets Show Promise Author: Investing.com

Investing.com – In a research note published Tuesday, RBC analysts forecast more opportunities in value-oriented sectors around the world.

The report, published quarterly, gathers the opinions of RBC equity analysts from the United States, Europe, Canada and Australia.

The study also provided information on the potential impact of individual sectors on election outcomes, an important consideration when deciding investment strategies.

The most promising earnings forecasts were for materials, financials and energy – key components of value trading.

⚠️Follow your favorite companies with InvestingPro! Our Summer Sale is now live, use coupon code INVPRODEAL and save over 50%!⚠️

On the other hand, earnings and valuation assessments for Consumer Staples were more negative. Energy and financials were the main exceptions to the general recognition of the negative impact of higher interest rates on industries.

Regionally, the US, Canada and Europe showed an optimistic earnings outlook, albeit with significant pressure from higher interest rates. Valuations were most attractive in Canada and Europe.

Recent performance changes, including a flattening of US equities relative to the rest of the world, are consistent with the survey results and suggest a warranted rotation with potential for further upside.

In the context of the upcoming US election, RBC analysts provided insight into the potential implications for the industry in the event of various outcomes. The survey indicated a slightly positive bias if the Republicans sweep or if Trump wins and Congress is divided, with the most constructive views at the sector level in these scenarios being communication services, energy, financials and healthcare.

A slightly negative bias could be observed in the event of a Democratic victory, with the most negative sector views in this scenario also being in communication services, energy, finance and health care.

In the US, RBC analysts continue to see more opportunities in value-oriented sectors. Despite the survey results, there were no changes to RBC’s US sector recommendations. They remain overweight in financials, energy, materials and utilities, underweight in consumer discretionary and real estate, and market-weight in other sectors.

Outside the US, analysts have shown a constructive view on commodity-oriented/cyclical sectors. In Europe, the outlook for earnings and valuation is constructive, with the most constructive view being on the energy sector.

For Canada, the outlook for results and assessments is constructive, with views on the energy sector being most constructive.

In Australia, views on performance and valuation were close to neutral, with the most constructive views being recorded for Communication Services and Materials.