Societe Generale’s head of US equity strategy, Manish Kabra, has cautioned that markets are currently at what he describes as “a tactical fundamental crossroads.” Kabra suggests these conflicting signals often precede significant market corrections. According to Kabra, historical data indicates such periods are followed by S&P 500 drawdowns exceeding 5 per cent. Despite the warning, Kabra views these pullbacks as potential opportunities for investors to increase thematic exposure.
Kabra anticipates a clearer upturn in the equity index following key policy catalysts. These catalysts include lower mortgage rates spurred by falling US Treasury yields. Furthermore, he expects reduced uncertainty after Donald Trump’s scheduled visit to China to meet with Xi Jinping in April to positively influence the market.
Kabra also highlighted the Federal Reserve’s potential actions, noting that “With real Fed funds still restrictive (3.75 per cent versus 2.5 per cent core CPI), the [Federal Reserve] retains scope to cut in 2026.” He projects a base case S&P 500 target of 7300 in 2026. This growth is expected to be driven by a broadening profit cycle, with earnings per share (EPS) trending towards $US333 in 2027.
The S&P 500 was trading near 6885 in mid-afternoon trading in New York on Tuesday (Wednesday AEDT). Societe Generale is a French multinational investment bank and financial services company.
