JPMorgan suggests that upward revisions to corporate earnings in the US and Europe, along with improving manufacturing data, are creating a favorable environment for equities, prompting investors to buy on any market dips. A team of strategists led by Mislav Matejka noted that the regional earnings gap is narrowing, positioning non-US stocks to outperform their US counterparts for a second consecutive year.

Emerging market equities are also expected to outperform their developed market peers. While future returns are unlikely to be dominated by the artificial intelligence sector, semiconductor stocks are anticipated to stabilize, providing support for the relative performance of emerging markets. The report highlights that current positioning in emerging market stocks is relatively light, suggesting that fund inflows could regain momentum and mirror the patterns seen earlier in the year.

Strategists added that as long as inflation expectations remain anchored, rising bond yields and modest central bank tightening are unlikely to disrupt the positive outlook for the stock market.