MILAN, March 7 (Reuters) - JP Morgan Cazenove has reduced the weight of stocks in its balanced portfolio to “underweight” for the first time since 2007, saying the recent market rebound was set to peter out.
“We think that one should start to re-enter the shorts,” JP Morgan strategist Mislav Matejka said in a research note, pointing out that from a technical standpoint equities were now closer to overbought, rather than in oversold territory.
JP Morgan said its decision followed gains seen in equities since mid-February and suggested clients use any bounce caused by the European Central Bank (ECB) to cut their exposure.
It said the euro zone was at an earlier stage of the cycle but was unlikely to decouple, while the UK remained its top regional pick globally despite risks of ‘Brexit’ - namely Britain’s vote in June on whether to stay in the European Union.
Utilities and telecoms remained the top global sector “overweights”, it added. (Reporting by Danilo Masoni; Editing by Sudip Kar-Gupta)