TLDR
- JPMorgan says investors with a 3–12 month horizon should buy during any market weakness
- Analyst Mislav Matejka warns against “succumbing to bearish views” despite geopolitical tension
- S&P 500 earnings per share estimates continue to move higher
- JPMorgan expects international stocks, emerging markets, small caps, and value to outperform
- The bank sees 2026 as materially different from 2022 in terms of inflation and labor market conditions
JPMorgan published a research note on Monday telling investors to treat any renewed market weakness as a buying opportunity. The bank believes the conditions for another V-shaped recovery are already in place.
Analyst Mislav Matejka, head of European strategy at JPMorgan, led the note. He said investors with a time horizon of three to twelve months should be adding risk during pullbacks, not pulling back from markets.
Matejka pointed to the current geopolitical environment, which includes tension related to the Strait of Hormuz and the ongoing Iran conflict. He said military conflicts create volatility but argued that the risk of getting “whipsawed” by staying bearish is too high.
JPMorgan noted that bearish sentiment had become the consensus view about two to three weeks into the conflict. Oil prices were widely expected to spike, and investors had heavily reduced their market exposure.
The bank said that setup, combined with oversold signals, was the cue to start buying. JPMorgan first made that call on March 23.
How 2026 Differs From 2022
Matejka said the current environment is different from 2022 in several ways. Inflation pressures are less severe, corporations have less pricing power, and wage growth is being held back in part by artificial intelligence adoption.
Real rates and labor market conditions also differ from the 2022 period, when pandemic-era complications made inflation harder to control. Because of this, JPMorgan is recommending long-duration assets that are sensitive to interest rate changes.
The bank said central banks are likely to look through an expected 1.5 percentage point rise in year-on-year inflation. Matejka added that inflation expectations are “unlikely to de-anchor.”
S&P 500 earnings per share estimates for 2026 have continued to rise. A US growth indicator, the ISM manufacturing survey, is registering three-year highs. Eurozone earnings per share growth may reach 18.2% this year.
The Citigroup Economic Surprises Index is also strongly positive at present, according to the note.
Where JPMorgan Sees Opportunity
JPMorgan expects international stocks and emerging markets to resume outperforming US equities. The bank also favors small caps and value stocks over growth.
Before the Iran conflict, international stocks were already outperforming US equities by 11%. JPMorgan expects that trend to reassert itself in the second half of 2026 as military tensions ease and the dollar’s safe-haven strength fades.
Emerging market valuations remain at a 34% discount to developed markets. MSCI Europe trades at 14 times 2026 forecast earnings, compared to 19.5 times for the S&P 500.
Matejka said emerging market inflows, which stalled during the conflict, are likely to resume. The bank’s relative performance outlook points to fresh highs in the second half of the year.
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