JP Morgan prefers Volvo over Traton ahead of Q3 on Europe and U.S. exposure

** JP Morgan puts Volvo VOLVb.ST on positive catalyst watch (CW), predicting it to outperform peers in Q3, while it places Traton 8TRA.DE on negative CW, expecting a hit from volume effects and currency headwinds

** The truck industry in Europe is experiencing an improving manufacturing with robust freight fundamentals and healthy utilisation levels, suggesting a replacement-driven market, the broker says

** "Build vs order trends favour Volvo and DTG DTGGe.DE for 2H, while Scania (Traton) appears weaker," it adds

** Despite resilience of the underlying freight activity in North America, the industry faces near-term volatility with weak order intake, high inventories, pricing uncertainties and the impending Section 232 ruling, JPM adds

**"Recent order momentum shows a notable upswing for Volvo and International Motors (Traton), driven by new product launches," the broker notes

** JPM expects Volvo to outperform peers due to better capacity utilisation and earnings momentum in Europe, lean inventories, new product launches in North America, and a high local U.S. footprint

** As for Traton, the broker expects negative volume effects at Scania as well as in South America, and an impact on margins from currency fluctuations