JP Morgan ups IT to overweight, sees stocks extending gains
Sentiment in stockmarkets is no longer "depressed" and many tactical indicators have come out of 'buy' territory, but JP Morgan still expected shares to make further gains into the end of the year-end.
Economic growth in China was expected to improve and would continue to be resilient in the Eurozone and US.
Seasonals were also supportive, the research team led by Mislav Matejka said in a research note sent to clients.
A case in point was the 18-month high reached by the IFO business index for Germant, despite the headwinds from China and Volkswagen, Matejka pointed out.
That should see a bounce in Germany's benchmark Dax index - which was at 30-year lows - Matejka pointed out, despite the increasing probability of an interest hike out of the US Federal Reserve come December.
Indeed, a rise in interest rates might reveal the new market leaders.
JPMorgan highlighted how the US BKW bank index remained strongly linked to bond yields.
Its 'key' overweight remained consumer discretionary, including automobiles.
The broker also decided to add to its position in IT, upgrading the sector to 'overweight' from 'neutral' on the back of the improvement in the Asian tech orders cycle, attractive valuations and FX tailwind.