Non-US equities the durable option – ClearBridge

Mike Taylor

Managing Editor and Publisher

29 June 2026

The case for diversifying beyond US equities is becoming more compelling, according to the latest ClearBridge Investments mid-year outlook.

ClearBridge head of market and economic strategy, Jeff Schulze said improving earnings expectations, attractive relative valuations and a broader set of macro catalysts suggest non-US equities may be entering a more durable period of leadership.

Clearbridge believes the opportunity in international equities extends beyond a short-term rebound. One reason for this is the earnings backdrop, particularly in emerging markets.

“Earnings revisions for the MSCI Emerging Markets Index have moved materially higher, outpacing the improvement seen in the U.S., Europe and Japan,” Schulze said. “That matters because earnings momentum is often a key driver of sustained market outperformance.”

“In our view, emerging markets remain well positioned to benefit from continued demand tied to the AI buildout, and particularly the companies and countries providing the infrastructure, components and power needed to support that expansion,” he said.

Schulze said valuations strengthened the ClearBridge argument.

“Even after recent gains, the discount between U.S. and non-U.S. markets remains historically wide, leaving room for further upside if fundamentals continue to improve. A softer U.S. dollar would add another tailwind, as dollar weakness has historically supported non-U.S equity returns by easing financial conditions and improving capital flows into overseas markets,” Schulze said.

“If monetary policy in the US becomes more accommodative and long-term rates move lower due to a durable resolution in the Middle East, that combination could provide additional support for international equities broadly,” he said.

Beyond the near term, ClearBridge highlights several structural forces could make this cycle more durable than prior periods of non-U.S. outperformance.

“International markets generally offer greater exposure to cyclical sectors such as financials, industrials, energy and materials, which may benefit in an environment of firmer inflation, higher nominal growth or rising fiscal support outside the U.S.,” Schulze said.

“A commodity upcycle tied to data centre construction, grid modernisation and renewable energy investment could also disproportionately benefit many international and emerging economies, particularly those with meaningful metals and resource exposure,” he added.

“A recovery in Chinese consumer demand would have meaningful spillover effects across global supply chains and regional equity markets,” Schulze said

“At the same time, the continued democratisation of AI could improve productivity and reduce costs for companies outside the U.S., broadening the benefits of technological innovation beyond a narrow group of mega cap winners.”

Taken together, ClearBridge says these trends suggest international equities may offer investors a combination of cyclical upside, structural growth and diversification at a time when market leadership may be starting to broaden.

“The opportunity in international equities is no longer just about valuation support or mean reversion. It is increasingly supported by improving earnings, favourable macro conditions and multiple pathways to broader market leadership,” Schulze said.