JPMorgan has reiterated a constructive outlook on global equities through the end of 2026, forecasting a gradual advance driven by sector rotation rather than a broad-based market surge. Strategist Fabio Bassi, writing in a client note published Monday, highlighted improving risk appetite as reflected in the semiconductor sector’s recent recovery.
The bank favors quality and growth stocks, large-scale hyperscale technology companies and the semiconductor sector, which it views as attractive following recent repricing. Bassi noted that higher long-term yields and steeper yield curves may signal stronger capital demand and investment opportunities, rather than policy missteps by central banks.
Macro conditions remain supportive, with a Goldilocks scenario of sustained disinflation and a pausing Federal Reserve potentially broadening the market’s upward trajectory. In developed markets, long-term bond yields have risen alongside renewed curve steepening, driven by supply-side pressures as hyperscale corporate capital expenditures compete with sovereign issuance. Strong real returns, underpinned by confidence in artificial intelligence monetization, have contributed to the shift.
Longer-dated Treasury buybacks, particularly in 10-year and 30-year maturities, have intensified as investors express discomfort with elevated long-term yields. JPMorgan does not expect next week’s Jackson Hole symposium to resolve ongoing debates about the Federal Reserve’s reaction function, suggesting policy uncertainty will persist in the near term.
