© Reuters S&P 500 is overvalued; risk-reward unattractive at present ranges – JPMorgan
By Senad Karaahmetovic
Only a day after Morgan Stanley warned its purchasers that the bear market is prone to proceed in March, JPMorgan’s fairness strategists echoed their colleagues’ sentiment towards U.S. equities.
The had one other stable day yesterday, gaining 0.31% to commerce close to the 4000 deal with as soon as once more.
JPMorgan strategists warned that the relative fairness valuation is on the excessive finish of the historic vary.
“Historical past implies that for present stage of actual charges the S&P 500 a number of is ~2.5x overvalued. Moreover, one may argue that world central financial institution liquidity acted as a tailwind for threat belongings in current months; nevertheless, we see rising likelihood of that tailwind turning right into a headwind,” they wrote in a be aware to purchasers.
Furthermore, the strategists reminded traders that declining central financial institution liquidity tends to extend monetary stress. Traditionally, one of these surroundings ends in fairness underperformance.
“The danger-reward for equities is unattractive at present ranges, notably for Small-caps which might be disproportionately extra delicate to rising value of capital,” they added in a shopper be aware.
The S&P 500 is down 2.3% in February, regardless of printing the best stage since August earlier this month.
