JP Morgan thinks risk-reward for equities will likely improve going into 2H

Equity strategists at JP Morgan sounded a relatively upbeat note on the outlook for stocks globally.

"We believe that the fundamental risk-reward for equities is likely to improve as we approach 2H," the strategy team led by Mislav Matejka said in a research note sent to clients.

To back up their case, they pointed to the possibility that the moment of peak hawkishness of the US central bank was now passed - at least "for now".

So too, bond yields were levelling off, the interest rate curve had stopped flattening and gains in the greenback had stalled.

Furthermore, expectations were that inflation had likely peaked in annual terms.

"Many describe the recent market bounce as a 'bear market rally', but the chances are that the stabilization becomes more durable," they added.

They also highlighted the improvement in the so-called 'market internals' over the preceding month.

Banks, Consumer and Commodities were all outperforming and earnings' revisions had again turned positive in key regions with almost all sectors benefitting from the latter.

All told, they remained 'overweight' on Value relative to Growth but believed that both now looked better in comparison to Defensives, save for Telecoms which they kept at overweight

Their most preferred region was still the UK with the investment bank overweight on both the FTSE 100 and FTSE 250.