JP Morgan strategist: Better to sell oil company stocks now
According to Marko Kolanovic, chief global market strategist at JPMorgan, investors should take advantage of the divergence between the performance of oil stocks and that of crude oil this year to sell energy stocks in the near term.
Kolanovic, still bullish on the energy sector over the long term, believes stock prices could soon start falling, he told clients in a recommendation dated Thursday and quoted by Bloomberg .
Investors now have an opportunity to sell in the near term because “a huge gap has opened up between energy stocks and the price of energy commodities,” Kolanovic said.
JPMorgan's chief strategist sees stock prices fall more than 20% in the near term. “This is a short-term tactical move and given that longer-term we still believe in the energy supercycle and broad market recovery after a Fed turnaround, a significant pullback (20-30%) energy stocks would be a great entry point,” Kolanovic wrote in the note to clients.
The energy sector of the S&P 500 index jumped 52.4% through Dec. 8, according to S&P data compiled by Yardeni Research. It is the only major sector of the S&P 500 to have gained so far this year. Within the energy sector, the Integrated Oil & Gas sub-sector was up 63.2% year over year, Oil & Gas Equipment & Services up 49.9%, Oil & Gas Exploration & Production up 45.2% and Oil & Gas Refining & Marketing 55.5% YoY.
Crude oil prices, however, just erased all of 2022 gains as Brent crude plunged below $80 a barrel on Tuesday, hitting its lowest level in a year. Prior to this week, the last time Brent oil traded below $80 a barrel was in early January, more than a month before Russia's invasion of Ukraine, which rocked energy markets and sent crude oil prices above $100 a barrel in the spring. An intensification of the economic slowdown would lead to a drop in oil prices and therefore to a deterioration in the profits of companies in the sector.
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The article JP Morgan strategist: Better to sell oil company stocks now comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/stratega-jp-morgan-meglio-vendere-ora-i-titoli-delle-societa-petrolifere/ on Sun, 11 Dec 2022 21:49:39 +0000.