Run higher in Eurozone equities set to continue, JP Morgan says
The rally in commodities, autos and luxury-exposed equity issues had further to run, analysts at JP Morgan said.
Stocks were set to continue advancing into the end of the year, with Eurozone shares being particularly attractive, the broker said.
Resilient purchasing managers’ indices, the likelihood of further action from the European Central Bank and the fact that the Euro Stoxx 50 was lower than six months ago all supported the above thesis, according to analyst Mislav Matejka.
The factors which led him to recommend closing ‘shorts’ in commodities were not exhausted yet either; namely: 1) positioning, 2) Fed change and 3) potential turn in Chinese data-flow.
“We think that the first two drivers are not exhausted yet. Positioning is still short,” Matejka said.
The analyst highlighted the rebound in Chinese house prices – which had been increasing for 6 months –, improved loan growth and a potential pickup in infrastructure orders in the Asian giant.
“We think that the rebound in EM vs DM, which started in mid-August, has legs, and in addition to commodities, we would favour the Autos and Luxury sectors.”