JP Morgan maintains a bullish outlook on global equities, arguing that recent volatility triggered by oil prices above $100 and climbing bond yields is temporary and likely to subside as Q3 earnings reports arrive.
Brent crude above $100 triggered equity sell-off, but near-term direction uncertain as neither US nor Iran show clear pain threshold.
JP Morgan advises against selling, expecting the oil-driven equity dip to be temporary and Q3 results to reassure.
JP Morgan strategists advise investors to resist selling during the current market dip, citing robust corporate earnings and resilient historical performance. While rising Brent crude prices and bond yields have pressured global indices, the bank expects third-quarter results to restore market confidence.
The bank points to robust corporate earnings and a historical trend where equities have successfully absorbed rising bond yields throughout the year.
The primary risk is the US 10-year bond yield approaching the 5% to 5.5% range, where the positive correlation between yields and equities could flip.