Analysts at JPMorgan said the global economy could avert a recession as data points to a possible soft landing, while the Federal Reserve may have “over-reacted” with an increase of 75 basis points in July.
The brokerage said in a note on Monday that a slew of recent data from major economies is suggesting stabilizing consumer confidence, along with inflation and wage pressures.
“The chances of a soft landing have increased with moderation in inflation and jobs print, while at the same time, the position remains at extremely low levels,” the brokerage said.
Analysts said that among stocks, the energy sector is trading at a steep discount and offers favorable investment opportunities.
The brokerage is also bullish on China as the country eases COVID-19 restrictions and expands fiscal stimulus, increasing bets on riskier assets.
Last week’s polls showed Europe is almost certainly entering a recession, with inflation running more than four times the European Central Bank’s target of 2%. The rising cost of living crisis and a gloomy outlook are also making consumers wary of spending.
But JPMorgan said it was expecting European governments to act to protect consumers from energy inflation, as natural gas prices skyrocketed after sanctions-hit Russia disrupted supplies.
JPMorgan said corporate earnings in Europe were also “defying the economic momentum”.
US Labor Department data last month showed that a sharp drop in the price of gasoline in July did not drive consumer prices up, signaling relief for Americans who haven’t lowered inflation levels in four decades. have seen.
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