Equity Strategy Cyclicals, Value and Small caps lead ytd - a bridge too far for some?

Research evidence excerpt

Equity Strategy Cyclicals, Value and Small caps lead ytd - a bridge too far for some?

J P M O R G A N Global Markets Strategy

18 May 2026

Equity Strategy

Cyclicals, Value and Small caps lead ytd - a bridge too

far for some?

• Looking at the ytd performance beneath the surface, many we speak to find it Equity Strategy

AC somewhat counterintuitive that in Europe Cyclicals, Value & Small caps are Mislav Matejka, CFA

all in the lead ytd, and some are even increasing this lead despite the Iran (44-20) 7134-9741

conflict in the backdrop. In the US, Cyclical sectors are also ahead ytd, but mislav.matejka@jpmorgan.com

small caps and Value style have since the start of the conflict surrendered the J.P. Morgan Securities plc

bulk of what was a big 8-10% outperformance up to that point. Cyclicals/ Prabhav Bhadani, CFA

Defensives lead in both regions remains the case even when Tech/AI impact is (44-20) 7742-4404

prabhav.bhadani@jpmorgan.com

fully stripped out from the comparison - top chart. J.P. Morgan Securities plc

• The overall market breadth is very narrow, the proportion of stocks Nitya Saldanha, CFA

outperforming on a 3-month lookback is at fresh lows in both the US and Europe. (44 20) 7742 9986

That said, the breadth of the beta outperformance is better, with 50%+ high beta nitya.saldanha@jpmchase.com

stocks beating low beta ones. Sectorwise, most Cyclical groups are ahead with J.P. Morgan Securities plc

the exception of Discretionary, and most Defensives are lagging, with the Karishma Manpuria, CFA

exception of Utilities and Telecoms. We entered this year long Value, small caps (91-22) 6157-4115

karishma.manpuria@jpmchase.com

and Cyclicals in International portfolios, and revisit their cases below: J.P. Morgan India Private Limited