JPMorgan strategists said Monday they remain concerned about the Eurozone market, highlighting the potential for a repeat of last summer's downturn.
“We don’t expect Eurozone to directionally decouple from the US, but we see an improved relative risk-reward for Eurozone equities versus the US” due to several reasons, strategists wrote. Moreover, improved performance in China is also likely to benefit the Eurozone market while the US faces higher risks of concentration and momentum unwind. In addition, Eurozone small caps are poised to benefit after ECB cuts.
“Ahead of the FOMC meeting, we see Powell’s opening remarks echoing recent comments that 1Q24 data haven’t increased its confidence of getting back to its 2% target, so we stay neutral on outright duration and prefer 5s/30s steepeners,” they said.