JPMorgan tells clients to use geopolitical weakness to add, as fundamentals are constructive

• The bank expects near-term risk-off after geopolitical escalation, but sees weakness as a buying opportunity over 3-, 6-, and 12-months; says fundamentals are supportive, activity is resilient, consumer wealth effect is positive, and corporate capex is backed by robust earnings.
• JPM says Mag-7 and anti-AI groups have derated sharply, with relative P/E near 10-year lows and record lows respectively; while both may lag, absolute downside is seen as more limited.
• The bank reiterates its preference for leadership broadening towards Value, small caps, International and EM over DM; cautions on Software, Business Services and Media; it also flags mining rally as maturing.

JPMorgan is advising clients to view the current geopolitical weakness as a buying opportunity, emphasizing that despite short-term risks, the underlying fundamentals remain solid. They highlight resilience in activity and a positive consumer wealth effect, suggesting that investors may find value in the market, particularly in sectors like Value and small caps, while cautioning against certain areas like Software and Media. This perspective could lead to a strategic shift in asset allocation amidst impending volatility.