RBC Insights: Value-oriented sectors and non-US markets show promise

Investing.com - In a research note relased on Tuesday, RBC analysts have forecasted more opportunities in value-oriented sectors worldwide.

The report, published quarterly, consolidates views from RBC's equity analysts across the United States, Europe, Canada, and Australia.

The survey also offered insights into potential sector impacts under various election outcomes, an essential consideration for investment strategies.

Performance outlooks were most encouraging for Materials, Financials, and Energy — key components of the value trade.

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Conversely, performance and valuation assessments for Consumer Staples were more negative. Energy and Financials were the main exceptions to the general acknowledgement of the negative impact of higher interest rates on industries.

Regionally, the US, Canada, and Europe showed optimistic performance outlooks, albeit with significant pressures from higher interest rates. Valuations were found to be most attractive in Canada and Europe.

The recent shifts in performance, with US equities flattening relative to non-US equities, align with the survey results, suggesting a justified rotation with potential further room for movement.

In the context of the upcoming US election, RBC analysts provided insights into potential industry implications under various outcomes. The survey found a slightly positive bias if Republicans sweep or if Trump wins and Congress is split, with the most constructive sector-level views in these scenarios for Communication Services, Energy, Financials, and Health Care.

A slightly negative bias was observed if Democrats sweep, with the most negative sector views in this scenario also for Communication Services, Energy, Financials, and Health Care.

In the US, RBC analysts continue to see more opportunities in value-oriented sectors. Despite the survey results, no changes were made to RBC's US sector recommendations. They remain overweight Financials, Energy, Materials, and Utilities, underweight Consumer Staples and Real Estate, and market weight other sectors.

Outside the US, analysts showed a constructive outlook on commodity/cyclically oriented sectors. In Europe, performance outlooks and valuation views lean constructive, with views on Energy being the most constructive.

For Canada, performance outlooks and valuation views lean constructive, with the most constructive view on Energy.

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