"Europe Is Making a Comeback": Why Does JPMorgan Consider Stocks in the Region Attractive Again?

Investors’ deep-seated reluctance to invest in European assets, combined with falling oil prices, is creating opportunities to buy them at attractive prices, according to Karen Ward, chief market strategist for Europe, the Middle East, and Africa at JPMorgan Asset Management. Her opinion is cited by Bloomberg. The European Stoxx 600 index has lagged only slightly behind the leading U.S. benchmark, the S&P 500, in terms of performance this year.

Against the backdrop of oil prices falling to their lowest level since the early days of the war between the U.S. and Iran, as well as strong growth in the artificial intelligence sector in U.S. and Asian markets, European stocks remain relatively cheap, offering an attractive entry point, Ward said in an interview with Bloomberg.

“I’m actually quite optimistic about Europe, and the very fact that no one agrees with me tells me that I must be right. “Once we see the Iran issue recede and oil prices fall, European stocks will break out,” Ward said.

The regional benchmark stock index—the Stoxx Europe 600—has continued to lag behind its U.S. and Asian counterparts since the start of the year, although the gap has narrowed in recent weeks amid hopes that the war between the U.S. and Iran will end. The Stoxx Europe 600 has gained more than 7% since the start of the year, while the U.S. broad-market S&P 500 index has risen more than 8% and the MSCI Asia Pacific index has gained about 24%.

According to Ward, once the final peace agreement takes effect, the markets will most likely return to the positioning they had prior to the start of the conflict. During that period, investors were pulling funds out of U.S. assets due to concerns that the technology sector’s potential in the field of artificial intelligence had been exhausted, and were seeking opportunities to diversify in international markets.

“We’ve come back to the same question: ‘Okay, markets aren’t cheap anywhere—where else is there potential for growth?’ and ‘How can I diversify my portfolio while moving away from the tech sector?’ These are two fundamental questions, and Europe provides the answer to both,” she said.

Nevertheless, according to her, many clients—who still vividly remember the decade during which the European market lagged behind the American one—are not quick to share her optimism about the region.

While anticipating a “revaluation of the broad market index,” Ward at the same time urged caution regarding some of the oldest large companies in the automotive and pharmaceutical sectors. Instead, she favors sectors that can benefit from “a kind of global industrial upswing,” including the financial sector, manufacturing, and the chemical industry.

Oil prices fell below $77 per barrel during trading on June 18 after U.S. President Donald Trump signed an interim agreement to end the conflict and resume shipping through the Strait of Hormuz. At the time of this writing, July WTI crude oil futures were down 3.7% to $73.9 per barrel. August contracts for the benchmark Brent crude were down 3.5% and trading at $76.7 per barrel.

This article was AI-translated and verified by a human editor