Jefferies: Geopolitics biggest risk to markets, remain positive for H2

Geopolitics present the biggest risk to markets due to escalating tensions in the Middle East and the persisting conflict between Russia and Ukraine, Jefferies strategists said Thursday.

"We remain positive for equities and credit in the second half of '24; see a range-bound market for rates while the rally in equities broadens out,” the investment bank noted. It expects the Federal Reserve and the European Central Bank to initiate rate cuts in September, although a shallow rate-cutting cycle is anticipated.

Strategists said that large-cap stocks have dominated in terms of earnings and revenue growth. However, they note this trend could change by the fourth quarter, with small-cap stocks starting to catch up.

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