Categories: Market Overview

JPMorgan says stocks in these sectors will lead markets higher as economy recovers

Investment bank JPMorgan expects cyclical stocks to lead the market higher in the medium- to long-term as the business cycle improves. “You’re going to see cyclicals and more defensive names continue the rally after we get past this period of adjustment,” said James Sullivan, head of Asia ex-Japan equity research at JPMorgan.

Cyclical stocks are companies whose underlying businesses tend to follow the economic cycle of expansion and recession. Some of these include sectors such as finance, energy and industrial. Defensive stocks — such as health care and consumer staples — typically provide consistent earnings and dividends regardless of stock market conditions.

Global stock markets wobbled in recent weeks as bond yields rose, driven by optimism in the vaccine rollout for Covid-19 and the resumption of consumption spending. The move fueled expectations of higher inflation and investors worried it would prompt central banks to raise interest rates. Higher interest rates can knock down stocks with relatively high valuations.

Interest rates concerns also accelerated a market rotation — as investors took money out of expensive tech and growth stocks and put them into other cyclical sectors such as finance, energy and industrial. Stocks have rebounded in recent sessions but analysts still expect market conditions to remain volatile.

Steepening of the yield curve is positive for the overall profitability of large financial institutions, Sullivan explained, adding that the investment bank is overweight for both the banking and insurance sectors. Financial companies typically benefit from rising interest rates as it expands their profit margin. A steepening yield curve occurs when rates for longer dated bonds rise faster than interest rates for shorter dated bonds and typically indicates that investors expect rising inflation and stronger economic growth.

JPMorgan says stocks in these sectors will lead markets higher as economy recovers, CNBC, Mar 12

The FxPro News Team

This team of professional journalists announces the most interesting and influential articles from the major financial media as a brief summary. All such news may have sufficient potential to affect the course of trading assets.

Share
Published by
The FxPro News Team
Tags: JPMorgan

Recent Posts

Hang Seng meltdown

The Hang Seng Index has fallen 20% from its peak, marking the start of a…

27 mins ago

SP500 quiet correction

The S&P500 reached the 6000 mark but faced resistance due to fatigue and dollar appreciation.…

46 mins ago

The third day of Crypto cooling off

The crypto market has continued to cool down for the third day, with a 1.7%…

3 hours ago

GBPUSD Wave Analysis 14 November 2024

- GBPUSD reversed from strong support level 1.2665 - Likely to rise to resistance level…

18 hours ago

USDCAD Wave Analysis 14 November 2024

- USDCAD broke resistance level 1.3950 - Likely to rise to resistance level 1.4050 USDCAD…

18 hours ago

The dollar has reached range limits

The US dollar has strengthened, reaching the upper boundary of its trading range. The British…

20 hours ago

This website uses cookies