LIVE MARKETS-"Eurozone short term looks overbought"

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"EUROZONE SHORT TERM LOOKS OVERBOUGHT"

In its latest strategy view, J.P.Morgan has kept a positive stance around Europe, lifting earnings projections and neutralising its preference for the U.S., but over the short term it believes some caution is warranted.

"We caution that tactically, near term, a lot has repriced very quickly. The big headline catalysts are behind us, sentiment on Eurozone has turned very bullish, flows have changed," says strategist Mislav Matejka at the U.S. bank.

"Eurozone P/E has rerated to 15% premium to historical, and if bond yields keep spiking, the valuation case would further erode. Eurozone short term looks overbought," he adds.

He also warns that tariff uncertainty doesn't look to have peaked yet and stimulus delivery has traditionally underwhelmed.

This could mean the euro zone goes through "air pockets" and is unlikely to decouple from the U.S..

And in case you were wondering - JPM stays bullish on defence, regardless of any potential Ukraine ceasefire.

(Danilo Masoni)

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