J.P. Morgan forecasts stock market cooling in Europe

J.P. Morgan forecasts stock market cooling in Europe

The trading day opened in Europe with a negative trend, where the FTSE index was down 0.3%, and the DAX and KAC opened unchanged. However, in Asia, stock exchanges in China, Hong Kong, and South Korea were closed in observance of the Chinese New Year, while the stock market in Japan was closed for “National Day.” Wall Street futures were trading in a mixed trend with minimal changes. Last Friday’s trading on Wall Street ended with a mixed trend, with indices such as the S&P 500, Dow Jones, and Nasdaq all experiencing varying changes.

Cloud Flair saw a 20% increase on Friday following better-than-expected reports, while PepsiCo and Pinterest experienced declines. American online travel agency, Expedia Group, also reported a decrease of about 18%. As for upcoming reports, Coca-Cola, IRB, Paramount Global, Cisco Corp, Occidental Petroleum, Coinbase Global, Applied Materials, and Rocco are expected to gain attention over the week.

American government bonds traded in a mixed trend, while the yield on 10-year bonds decreased slightly to around 4.17%. In the commodity and currency markets, American oil and Brent oil were trading at $76.5 and $81.7 per barrel, respectively. Cryptocurrencies such as Bitcoin and Ethereum experienced significant increases.

The upcoming week promises new data, including unemployment data in Great Britain, consumer price indices in Switzerland and the USA, GDP in the Eurozone, Japan, and the UK, retail sales in the US, and more. Analyst David Benjaminov warns of potential correction in the stock markets if economic data becomes negative, while J.P. Morgan presents a forecast that projects limited increases in the markets. They are more optimistic about small companies, citing them as a more attractive investment opportunity.

The analysts additionally point to several red flags indicating potential risk and volatility in the stock market. These include the inverted yield curve, the performance gap between small and large companies, and the absence of a risk premium on American stocks. Despite the uncertainty, the analysts at J.P. Morgan maintain their optimism.

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