JPMorgan issues mixed outlook for global stock markets

JPMorgan analysts have provided a mixed outlook for global equity markets, highlighting both risks from rising bond yields and potential drivers for growth. Grace Peters, Head of Global Investment Strategy at JPMorgan Chase Private Bank, warned that rising Treasury yields pose a primary risk. She noted that if 10-year US Treasury yields surpass the psychological threshold of 5%, markets could face sharp, reflexive selling. However, she characterized potential pullbacks of 5% to 8% before the US midterm elections as healthy profit-taking rather than a structural bear market.

Conversely, strategist Mislav Matejka expressed optimism, suggesting that rising interest rates may not be an insurmountable obstacle for stocks. He noted that much of the rate increase reflects strengthening economic activity, such as rising PMI data in the Eurozone. JPMorgan expects corporate earnings to remain strong and anticipates that market gains may broaden beyond the technology and artificial intelligence sectors in the coming year. Additionally, the bank predicts the US dollar could approach peak levels, while gold shows potential for recovery after recent volatility.