Societe Generale sees broadening rally favoring equal-weight strategy in 2H26

Investing.com -- Societe Generale told clients in a note Friday that market leadership has rotated from Materials and Staples earlier this year toward Energy, Technology and Healthcare, with the firm maintaining a preference for equal-weight exposure as the broadening trade continues into the second half of 2026.

Societe Generale described "Broadening in Full Bloom" as its core view, noting most major equal-weight cyclical sectors are now at all-time highs.

The firm said it has held a "longstanding bullish call on the broadening trades" via the S&P 500 Equal Weight index for 18 months, alongside overweight positions in Industrials, held for the past four years, as well as Utilities and Materials.

Societe Generale analysts said Financials and Consumers represent a "catch-up" opportunity in the second half of the year.

On technology, they commented that the sector is defined by "Dispersion over Direction," with aggregate operating cash flow and free cash flow at all-time highs. The firm also noted AI beneficiaries have significantly outperformed AI spenders, up 71% versus down 7% year-to-date, while its SG AI Dashboard remains "firmly constructive."

U.S. Consumer Cyclicals were flagged as "the last cyclical catch-up trade," noting the segment has returned -2% since early June compared with +12% for the S&P 500 Equal Weight, making it the only major laggard in the broadening trade.

The firm also highlighted its Cross Asset Momentum indicator, which turned positive for the first time since June 2, rising to 91%, driven by VIX and credit spreads at cycle lows. Furthermore, Societe Generale said market breadth remains strong, with 67% of stocks above their 50-day moving average.

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