A selloff that noticed US shares sink right into a bear market final week amid red-hot inflation information and a pointy Federal Reserve fee hike will probably ease within the second half, based on JPMorgan Chase & Co.
“The decision of peak Fed hawkishness bought delayed, however it’s not damaged, for the second half,” strategists led by Mislav Matejka wrote in a notice. “The continued opposed repricing of the Fed has understandably harm markets, however that doesn’t must be the template.” Additionally they count on inflation pressures to ease within the second half.
US and European inventory markets have been roiled since April, with stubbornly excessive inflation and hawkish central banks elevating the specter of recession.
The selloff has prompted Wall Road strategists to chop year-end targets for the S&P 500 — they count on the index to principally bounce again, ending simply 3% decrease for the yr, based on the most recent Bloomberg survey.
Whereas the Fed’s so-called dot plot nonetheless suggests an aggressive tempo of hikes, “if the Fed had been to start out delivering on expectations, somewhat than shocking on the upside, that might go a good distance in stabilizing market sentiment,” the strategists stated.