JPMorgan strategists say the U.S. stock market overestimates the risks of rate hikes.

Huoxing Finance reports that, on May 26, J.P. Morgan strategists analyzed that the market has overpriced the risk of potential central bank rate hikes, creating conditions for a rebound in stocks with the lowest volatility, such as consumer staples and utilities. Although investors are concerned that energy price shocks stemming from the Iran conflict could trigger another wave of rate hikes, similar to the aftermath of Russia’s invasion of Ukraine in 2022, the J.P. Morgan team led by Mislav Matejka noted that the current macroeconomic environment differs significantly from that period. In a research report, the strategists pointed out that, given all parties involved in the conflict are ultimately committed to finding an exit strategy, bond yields and oil prices are expected to decline over the next 6 to 12 months. Additionally, they forecast that corporate earnings prospects will remain strong and believe stagflation is not the most likely macroeconomic scenario for the second half of the year. (Jinshi)