After a bumpy start to the year, the risks facing global stocks are now priced in, according to JPMorgan Chase & Co.'s Mislav Matejka.
Neither the Federal Reserve nor the European Central Bank will move further into hawkish territory, "at least relative to what is priced in currently," strategists led by Matejka wrote in a note on Monday.
Meanwhile, headline inflation is peaking and earnings are likely to surprise positively. "We believe that equities still offer upside, and that the cycle is far from over," they said.
U.S. and European stocks started the year on the wrong foot amid fears that more aggressive monetary tightening to tame inflation will lead to a sharp slowdown in economic growth.
While a solid earnings seasons is helping to alleviate some concerns over a less forgiving macroeconomic backdrop, equity markets have remained volatile, and strategists are divided about the outlook for the rest of the year.
"We think it is wrong to position for a recession, given still extremely favorable financing conditions," very strong labor markets, strong corporate cash flows and the likely bottoming of economic growth in China, JPMorgan's team wrote.
