JPMorgan sees equity stress easing in second half

A selloff that saw US stocks sink into a bear market last week amid red-hot inflation data and a sharp Federal Reserve rate hike will likely ease in the second half, according to JPMorgan Chase & Co.

“The call of peak Fed hawkishness got delayed, but it is not broken, for the second half,” strategists led by Mislav Matejka wrote in a note. “The continued adverse repricing of the Fed has understandably hurt markets, but that doesn’t need to be the template.” They also expect inflation pressures to ease in the second half.

US and European stock markets have been roiled since April, with stubbornly high inflation and hawkish central banks raising the specter of recession. The selloff has prompted Wall Street strategists to cut year-end targets for the S&P 500 – they expect the index to mostly bounce back, ending just 3% lower for the year, according to the latest Bloomberg survey.

While the Fed’s so-called dot plot still suggests an aggressive pace of hikes, “if the Fed were to start delivering on expectations, rather than surprising on the upside, that could go a long way in stabilizing market sentiment,” the strategists said.

They reiterated their recommendation to add direct exposure to China and said they remained overweight on emerging markets compared with developed markets. Among the latter, they are neutral US equities and overweight UK and euro-zone stocks.

Among sectors, the strategists said they were overweight miners as valuations appeared attractive despite their recent outperformance. The group also offers “exceptional” dividend yields at 10%, they said.

(What’s moving Sensex and Nifty Track latest market news, stock tips and expert advice on ETMarkets. Also, is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds.)

Download The Economic Times News App to get Daily Market Updates & Live Business News.

Read More

Leave a Reply

Your email address will not be published.

You May Also Like

As Washington ramps up efforts to bring India on board with sanctions against Russia, U.S. treasury official on visit to Mumbai and Delhi

U.S. Assistant Secretary to discuss Russian oil purchases by India, rupee-rouble trade…

Eid-ul-Fitr moon sighting highlights: Saudi Arabia, India may mark Eid same day

Eid-ul-Fitr 2022 moon sighting highlights: There is a wafer-thin chance that Muslims…

सड़क, रेल, 5G… अरुणाचल बॉर्डर से सटे तिब्‍बत में क्‍या-क्‍या गुल खिला रहा चीन, सेना ने सब बताया

Edited by दीपक वर्मा | भाषा | Updated: May 17, 2022, 1:08…

Russia-Ukraine Crisis: Indian crisis: People without Covid-19 negative reports and unvaccinated Indians can enter Delhi airport

The Delhi airport issued a revised advisory to Indian citizens on Saturday…