Key Takeaways
- JPMorgan recommends investors with 3–12 month time frames should purchase equities during market declines
- Head of European strategy Mislav Matejka cautions against adopting pessimistic outlooks amid geopolitical uncertainty
- Earnings projections for the S&P 500 continue their upward trajectory
- JPMorgan forecasts superior performance from international equities, emerging markets, smaller companies, and value stocks
- The financial institution views 2026 as fundamentally distinct from 2022 regarding inflation dynamics and employment conditions
JPMorgan released an investment analysis on Monday advising clients to view market downturns as strategic entry points. The financial institution maintains that the foundation for another rapid market rebound is already established.
Mislav Matejka, JPMorgan’s head of European strategy, authored the research note. He recommended that investors operating with three-to-twelve-month investment horizons should increase their market exposure during corrections rather than retreating.
Matejka acknowledged current geopolitical challenges, including tensions surrounding the Strait of Hormuz and the continuing Iran situation. While he recognized that military confrontations generate market volatility, he maintained that the danger of being caught off-guard by maintaining a pessimistic stance is considerably greater.
JPMorgan observed that negative market sentiment had become the prevailing perspective approximately two to three weeks after the conflict began. Oil prices were anticipated to surge dramatically, and market participants had significantly decreased their equity positions.
The firm indicated that this configuration, paired with technical oversold indicators, represented the optimal moment to increase holdings. JPMorgan initially issued this recommendation on March 23.
Contrasting 2026 With the 2022 Environment
Matejka emphasized that today’s economic landscape diverges from 2022 in multiple critical aspects. Inflationary forces are more subdued, companies possess diminished pricing leverage, and compensation increases are being partially constrained by the integration of artificial intelligence technologies.
Real interest rates and employment market dynamics also contrast sharply with the 2022 scenario, when pandemic-related disruptions complicated inflation management. Given these factors, JPMorgan advocates for long-duration investments that demonstrate sensitivity to interest rate fluctuations.
The bank anticipates that monetary authorities will tolerate an anticipated 1.5 percentage point increase in annual inflation readings. Matejka emphasized that inflation expectations are “unlikely to de-anchor.”
Earnings per share forecasts for the S&P 500 in 2026 have maintained their upward momentum. The ISM manufacturing survey, a key US economic gauge, has reached three-year peaks. Eurozone earnings per share expansion could achieve 18.2% during the current year.
The Citigroup Economic Surprises Index currently reflects strong positive readings, the analysis noted.
JPMorgan’s Investment Recommendations
JPMorgan anticipates that international equities and emerging market stocks will regain their outperformance relative to American stocks. The institution also prefers smaller capitalization companies and value-oriented investments over growth stocks.
Prior to the Iran conflict escalation, international stocks had already delivered 11% superior returns compared to US equities. JPMorgan projects this pattern will reassert itself during the latter half of 2026 as military tensions diminish and the dollar’s safe-haven premium weakens.
Emerging market stock valuations continue trading at a 34% markdown relative to developed market peers. MSCI Europe currently trades at 14 times projected 2026 earnings, while the S&P 500 commands a multiple of 19.5 times.
Matejka predicted that capital flows into emerging markets, which paused during the conflict period, will likely restart. The bank’s comparative performance analysis suggests new record levels during the year’s second half.
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