JP Morgan sees increased downside risks for DJ Stoxx 600

The DJ Stoxx 600 equity benchmark is losing momentum even as other markets pick up the tempo, pointing to renewed downside risks, technical analysts at JP Morgan told clients.

Investments such as the S&P 500, emerging markets or asset classes like commodities have gone into 'risk-on' mode, whereas the Stoxx 600 looks in danger of falling towards the 320 point mark, initially, and eventually towards 300.

As of 10:14GMT the pan-European stock benchmark was 0.08% higher at 340.94.

However, within the Stoxx 600 Energy and Industrials were outperforming, prompting JP Morgan to overweight them from a technical-analysis perspective.

Indeed, they upped their recommendation on Energy from 'neutral' to 'overweight' while downgrading that on Healthcare from 'neutral' to 'underweight'.

The broker also saw risks in construction/materials although sector positioning was strengthening in Real Estate.

"We recommend taking profits on F&B, Retail and Travel & Leisure and no longer recommend an overweight," the broker added.

JP Morgan's recommendation was for short positions in the Stoxx 600 with a stop-loss order at 350.