JPMorgan Urges Adding Exposure as Slowing Wage Growth Eases Inflation Risk
JPMorgan's equity strategy team says current market sell-off differs from 2022 stagflation due to slowing wage growth and limited corporate price power, and recommends adding exposure over three- to twelve-month horizons. It projects Iran conflict de-escalation could trigger a risk-on reversal and maintains preference for international and emerging markets.
1. Market Sell-Off Comparison
JPMorgan’s equity strategy team highlights that wage growth is now decelerating rather than accelerating and corporates lack pricing power, making the current sell-off fundamentally different from the stagflationary losses across equity and bond markets in 2022.
2. Exposure Recommendation
The bank recommends that investors with three-, six- or twelve-month investment horizons use the recent market weakness to add equity exposure, warning that short-term traders risk being caught offside by a rapid risk-on rebound.
3. Conflict Outlook
On the Iran conflict, JPMorgan notes headwinds to a prolonged engagement—spanning energy price caps, political constraints and military considerations—and projects de-escalation could spark a swift reversal of risk-off sentiment.
4. Regional and Sector Preferences
JPMorgan reiterates its preference for international and emerging markets over US equities, as well as value stocks and small caps, citing an 11% year-to-date gain for MSCI World ex-US versus flat US equity returns before the conflict.