SocGen: Fed Cuts Could Fuel Equal-Weight S&P 500 and Global Stocks
Happy Fed Day. Despite turbulence, 2025 has been strong for investors — and Societe Generale strategists say the momentum isn’t slowing down.
None of the 28 major asset classes in their recommended multi-asset portfolio — spanning bonds, gold, and equities — are negative this year. The key driver? Fed rate cuts in a non-recessionary environment.
SocGen has shifted its global allocation toward more stocks and less cash: boosting equities to 50% (from 44%) and trimming cash to 5% (from 10%). Bonds take a slight dip to 35%.
“History shows that a dovish Fed supports global equities, not just the U.S.,” they note. Corporate earnings remain resilient, supported by AI growth and strengthening profits beyond tech.
With low private-sector leverage, rising fiscal spending, and global supply-chain realignment, they expect EPS growth to continue. That, combined with Fed easing, could keep S&P 500 sell-offs shallow and drive new highs.
To capture a broadening rally, SocGen favors the S&P 500 Equal-Weight Index and a basket of small-cap “ex-junk” companies (profitable firms with solid balance sheets). They see the S&P 500 reaching 7,300 by early 2026.
Their bullishness isn’t limited to the U.S. They’ve doubled exposure to Japan, kept strong positions in Europe, and slightly raised emerging-market weights. Germany’s new fiscal stance, Japan’s shifting price regime, China’s next bull market stage, and a European renaissance led by Italy and Spain all play into their outlook.
