- Investors should stay pro-risk and continue buying stocks as a synchronized global expansion takes hold thanks to mass vaccinations, JPMorgan’s Marko Kolanovic said in a note on Thursday.
- On top of the rollout of COVID-19 vaccines, highly accommodative monetary and fiscal policy, fading risks, and moderate investor positioning should drive a favorable environment for stocks.
- “We expect 2021 to deliver the strongest year of global GDP growth in over two decades,” Kolanovic said.
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Investors should buy stocks and remain risk-on as mass COVID-19 vaccinations help drive a period of synchronized global growth, JPMorgan analyst Marko Kolanovic said in a note on Thursday.
It’s a favorable environment for risky assets right now, as risks related to President Trump’s global trade war, the COVID-19 pandemic, and uncertainty tied to Brexit and US elections begin to subside, the note said.
At the same time, accommodative monetary and fiscal policy and moderate investor positioning leaves room for more upside in stocks.
“We expect 2021 to deliver the strongest year of global GDP growth in over two decades as mass vaccination permanently severs the link between the COVID-19 virus and economic activity,” Kolanovic said.
A strong economic rebound will be aided by additional stimulus measures, which led JPMorgan to increase its growth forecasts over the next few years, the note said. The bank expects US GDP to be above the path it was on prior to the pandemic by the end of 2022. Increased spending on infrastructure and healthcare under a democratic agenda should also help spur growth, according to the note.
President-elect Joe Biden just unveiled his $1.9 trillion stimulus plan, which calls for direct stimulus checks and enhanced unemployment benefits, funding to states and local governments, and a doubling of the federal minimum wage.
JPMorgan now expects US GDP growth of 5.3% in 2021 and 2.6% in 2022.
Within its overweight rating on stocks, JPMorgan favors cyclical and value assets, "which should continue to outperform as the vaccine rollout spurs a broader reopening of the economy and additional stimulus supports the recovery," Kolanovic said.