JPMorgan Says Record Highs in European Stocks Can Last and Widen

European equities are trading at fresh record highs, and JPMorgan Chase (NYSE:JPM) & Co. strategists say the rally can go on and even expand to markets that have been left behind.

The Stoxx Europe 600 Index closed at a historical peak last week after earnings optimism outweighed spreading coronavirus fears. To JPMorgan strategists, the fact that the European benchmark has risen above the level of 400 index points by about 8% is significant because in prior years a gain above this level was followed by months of heavy declines.

START TRADING NOW OR TRY A FREE DEMO ACCOUNT

But this time things are different, the strategists say. Unlike in the past, Eurozone manufacturing is starting to rebound, providing a favorable basis for a further advance in stocks. Additionally, just 23% of the Stoxx 600 companies and four country indexes are currently trading at record highs, leaving room for the rally’s expansion.

“There is a potential for short-term coronavirus-induced disruption in the first-quarter data flow, but we remain bullish on the global cycle, continuing to argue that U.S. recession is unlikely ahead of the presidential elections,” said JPMorgan strategists led by Mislav Matejka. “The breadth of the breakout could easily widen.”

The rally in global equities has been resilient to virus concerns, with investors continuing to buy risk assets on optimism that the economic impact of the epidemic will be limited. While the euro is trading near its lowest since 2017, economic data have been more encouraging for European stock investors, with January euro-area manufacturing slightly exceeding an initial estimate.

JPMorgan strategists raised euro-zone stocks to overweight at the end of September, correctly forecasting the continuation of gains, which have since reached about 9%. The analysts are underweight U.S. and U.K. equities and overweight euro-zone stocks.

Other factors that are in favor of the Stoxx Europe 600 Index, according to the strategists, are rising dividends and a valuation discount relative to bonds and global equities. The Stoxx 600 Index is trading at 15.4 times estimated earnings, relative to 17.5 times for MSCI World.

START TRADING NOW OR TRY A FREE DEMO ACCOUNT

A bounce in bond yields is also expected to help European equities, with banks being particularly sensitive, according to JPMorgan. This, in turn, should boost Spanish and Italian stocks as well as domestic sectors, the strategists said.




European Central Bank Headquarters And Frankfurt's Financial District Ahead Of Comprehensive Bank Assessment




OVERNIGHT MILLIONAIRE MIND-HACKS SECRETLY USED BY THE RICH & FAMOUS…




0321 biz Bombardier breakup




Breaking News: Alstom Confirms Talks On Potential $7 Billion Bombardier Deal




Alstom Confirms Talks On Potential $7 Billion Bombardier Deal

French train maker Alstom (PA:ALSO) has confirmed it is in talks on the possible acquisition of the train business of Canada’s Bombardier (TO:BBDb), a potential $7 billion deal that could help it build scale in the increasingly competitive rail sector. A deal could be important for Alstom, maker of the TGV bullet trains which speed […]

Read More…




Best Books For Making Money In The Stock Market

⇑⇓Best Books For Making Money In The Stock Market⇓⇑ #1 – The Intelligent Investor. (Revised Edition) This classic text is annotated to update Graham’s timeless wisdom for today’s market conditions… The greatest investment advisor of the twentieth century, Benjamin Graham, taught and inspired people worldwide. Graham’s philosophy of “value investing” — which shields investors from substantial error […]

Read More…




One thought on “JPMorgan Says Record Highs in European Stocks Can Last and Widen

  1. Pingback: JPMorgan Says Record Highs in European Stocks Can Last and Widen -

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.