JPMorgan’s Ward Says Falling Oil Can Unleash European Stocks

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(Bloomberg) — It’s time to buy European stocks, according to JPMorgan Chase & Co. Asset Management’s Karen Ward.

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Investors’ entrenched aversion to European equities is creating a buying opportunity, she said in a Wednesday interview in Zurich. With oil prices retreating to levels last seen in the early days of the war and the artificial intelligence sector’s heavy gains in US and Asian markets, European stocks remain relatively cheap, offering an attractive entry point, the chief market strategist for Europe, the Middle East and Africa noted.

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“I’m really bullish on Europe and it’s because no one agrees with me, so that tells me I must be right,” Ward said. “When we start to see this Iran problem fade and oil prices fall back, that European story is going to get unleashed.”

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The region’s benchmark stock index still trails counterparts in the US and Asia year-to-date, though a discount in valuation has already narrowed since signs started mounting last month that a resolution to the conflict could be found. Oil retreated on Thursday as US President Donald Trump signed an interim deal to cease the war and re-open the Strait of Hormuz.

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As a definitive agreement comes into effect, Ward said markets are likely to revert to pre-Iran war positioning, when investors were rotating out of US assets on concerns the AI trade had run its course and instead seeking diversification in international markets.

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“We’re back to that same question of ‘okay, markets aren’t cheap anywhere, where is there still scope for upside’ and how do I diversify from the tech story?” she said. “Those are the two fundamental questions and Europe’s the answer for both.”

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Still, she said that many clients — with a decade-long spell of European underperformance versus the US still burnt into their brains — were hesitant to share her optimism for the region. Ward, based in London, advises for the firm’s $4.3 trillion of assets under management.

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“They say ‘oh no, Europe is structurally incapable of growth’ and then they start to list all the things that Mario Draghi goes on about,” she said, referring to a report by the former European Central Bank President and Italian prime minister on European competitiveness. 

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Draghi’s blueprint for the region argues for both market integration and €1.2 trillion ($1.4 trillion) in annual investments on digital technologies, climate-friendly energy and defense.

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While expecting a “broad benchmark re-rating,” Ward cautioned on some of the legacy big companies in the auto and pharmaceutical sectors. Instead she likes sectors that could partake in a “kind of global industrial uplift,” including financials, industrials and chemicals.

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