Investors are likely to favor gold and technology stocks for now, as those bets are expected to provide a buffer against the risk of a U.S. recession this year, strategists at JPMorgan said.
Strategists at JPMorgan including Nikolaos Panigirtzoglou and Mika Inkinen, wrote in a note that strategies currently defined as "long-term holding" are focused on gold, growth stocks such as technology, and foreign exchange trading (shorting the U.S. dollar).
"The U.S. banking crisis has increased demand for gold, a proxy for beneficiaries of lower real rates and an effective hedge against 'catastrophic scenarios,'" they wrote.
These long-term strategic themes appear to have converged in recent months, JPMorgan noted. The deals look "relatively more attractive" as they have limited downside room in a mild U.S. recession but plenty of upside room in a more severe recession environment.
Spot gold hit a record high of $2,080 an ounce on Thursday April 4 and has risen 12.3% so far this year. At the same time, the Nasdaq composite index represented by technology stocks has also risen by more than 14% this year.
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