JPMorgan's Matejka: Buy stocks on dips amid geopolitical volatility

Investing.com - JPMorgan strategist Mislav Matejka maintains a bullish outlook on the stock market, believing that despite occasional geopolitical fluctuations, the current macroeconomic environment remains supportive.

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The strategist states that driven by strong earnings, economic activity, and controlled bond yields and inflation, the growth-inflation trade-off through 2026 may remain attractive. In his view, market weakness triggered by geopolitical tensions should be seen as an opportunity rather than a trend reversal.

“A strong rally in stocks could lead to risk-off events, especially when technicals become overextended, particularly if some adverse geopolitical news emerges… but we believe these won’t last long and should be viewed as buying opportunities,” Matejka said.

He downplays concerns that rising commodity prices or large capital expenditures in areas like artificial intelligence, defense, and infrastructure could reignite inflation.

According to Matejka, there are no clear signs of overheating in the economy at present, and inflation trends are actually slowing down. Therefore, he remains confident that price pressures will stay “well-behaved.”

Long-term yields have declined in recent weeks, as expected by the bank, and the Federal Funds futures pricing indicates nearly the same degree of easing as at the beginning of the year, despite strong economic data.

Recent reports show the ISM index reaching a three-year high, non-farm payrolls hitting a 10-month high, and U.S. industrial production recording its largest increase in nearly a year.

“In short, this is the scenario we’ve been expecting—the golden-haired girl,” Matejka wrote, adding that sustained momentum combined with a weakening dollar should support broader market leadership.

In equities, the strategist favors value stocks, small caps, and international markets, including emerging markets. After years of underperformance, international stocks outperformed U.S. stocks by 12% in 2025 and have led by another 8% so far this year. Matejka believes this rotation is justified given extreme positioning, the high concentration of the Mag-7, and significant valuation gaps.

Despite strong earnings, this mega-cap group has stagnated, and Matejka warns that if the Mag-7 fails to regain leadership, it will be difficult for the overall U.S. stock market to do so.

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