The global economy could avoid a recession, with data pointing to a potential soft landing, according to a note from J.P. Morgan..
The note issued yesterday by the brokerage said recent data from major economies suggests moderating inflation and wage pressures as well as stabilizing consumer confidence.
“The probability for soft landing has ticked up with moderating inflation and jobs prints, while at the same time, positioning remains at extreme lows,” the note said.
J.P. Morgan recommended the energy sector as a favorable investment opportunity, as it is currently trading at a heavy discount.
The brokerage is also bullish on China with Covid-19 restrictions finally being eased in the country, and Beijing set to introduce further stimulus measures.
Surveys have showed that Europe is almost certain to enter a recession, with inflation running at more than four times the European Central Bank’s target of 2%. A worsening cost of living crisis fueled by soaring energy prices is also affecting consumer confidence.
But J.P. Morgan said it was expecting European governments to protect households from the worst impacts of energy inflation, with natural gas prices rocketing in light of reduced supply from Russia.
Corporate earnings in Europe are also “defying economic momentum”, J.P. Morgan said.