JPMorgan: Falling Oil Prices Set to Unlock Upside for European Equities
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JPMorgan Asset Management's top Europe strategist Karen Ward is calling a buy on European equities, arguing falling oil + extreme investor avoidance = an underpriced entry window. She oversees $4.3 trillion in assets.
Why is someone managing $4.3 trillion saying "buy Europe now"?
Ward's starting point is a contrarian signal: almost nobody is bullish on Europe. This means → the market has already priced in the pessimism, leaving room for upside.
Her trigger is specific: Iran tensions fading + oil prices falling. In plain terms = Europe's economy is acutely sensitive to energy costs — when oil drops, corporate margins and consumer confidence improve in tandem.
After Trump signed an interim deal reopening the Strait of Hormuz, oil has already begun to retreat. Ward sees this as the catalyst she was waiting for.
Where exactly is the value in European stocks?
European benchmark indices still trail the U.S. and Asia year-to-date, but the valuation discount has started to narrow since signs of conflict resolution emerged last month.
Ward's second layer: AI stocks have already surged in the U.S. and Asia, leaving investors with two questions — "Where is there still upside?" and "How do I diversify away from tech concentration?"
Her answer: both questions point to Europe. This reflects a deeper signal — global capital is searching for its next destination beyond U.S. tech.
Why won't clients pull the trigger? How do you break a decade of scars?
Ward acknowledges most clients remain on the sidelines. The reason: European equities have underperformed U.S. stocks for a full decade.
The evidence clients cite most often is former ECB President Mario Draghi's competitiveness report — it argues Europe needs €1.2 trillion (roughly $1.4 trillion) per year in digital technology, clean energy, and defense spending to catch up.
In plain terms = clients' fears are grounded, but Ward's counter is that because everyone worries about the same thing, the fear itself is already absorbed in the price.
Which sectors does she favor — and which does she avoid?
Ward expects a "broad benchmark re-rating" across Europe, but is explicitly cautious on two traditional heavyweights: autos and pharma.
She favors sectors that can ride the "global industrial recovery": financials, industrials, and chemicals. This means → her bet is not on Europe's domestic demand story but on European companies' leverage to a global cyclical upturn.
This reflects a selective bull case — not "all of Europe is good," but "the right sectors at the right moment."
How did markets actually trade on the day?
European stocks opened slightly weaker Thursday. The STOXX 600 was down 0.15% at 638.35 as of 08:12 GMT.
The drag came from the Fed: rates held steady Wednesday, but the dot plot showed nine officials projecting one rate hike this year, tightening expectations for the policy path.
Two pockets bucked the trend: airlines rallied on lower oil (Lufthansa +0.9%, Air France +2.7%), and tech tracked the Asian rebound (Infineon and Aixtron both up more than 4%).
Content is for reference only, not financial advice.