They should continue to be seen as [a] fundamental overweight on anything longer than a one-month horizon,’ the bank said.
The volatility in the stock market since Russia invaded Ukraine may have pushed you away from equities. But you shouldn’t give up on them, J.P. Morgan strategists say.
“If one is selling on the back of the latest geopolitical developments now, the risk is of getting whipsawed,” the strategists, led by Mislav Matejka, wrote in a commentary.
“Historically, the vast majority of military conflicts, especially if localized, did not tend to hurt investor confidence for too long, and would end up as buying opportunities.”
The big issues are how long the Ukraine conflict lasts and whether commodity supplies will be cut off, The strategists said. “The potential for significant further worsening and the unintended consequences in this kind of a situation are understandably high, but we don’t see commodity flows stopping.”
When it comes to European stocks, the strategists said they aren’t “likely to perform as long as this crisis dominates the headlines, as long as bond yields are lower.” But European stocks “should continue to be seen as [a] fundamental overweight on anything longer than a one-month horizon, especially if commodity flows are not cut from Russia.”
J.P. Morgan listed its top European stock picks. Here are some of the big names that trade on U.S. exchanges.
U.K. oil company BP (BP) – Get BP Plc Report, Swiss miner Glencore (GLNCY) , U.K. engine company Rolls-Royce (RYCEY) , Netherlands-based airplane maker Airbus (EADSY) – Get Airbus SE Report, U.K. retailer Marks & Spencer (MAKSY) , French cosmetics company L’Oréal (LRLCY) , Dutch beer maker Heineken (HINKF) , German drug company Bayer (BAYRY) – Get Bayer AG Report, Finnish telecommunications company Nokia (NOKIA) , and Luxembourg steel maker ArcelorMittal (AMSYF) .
