Deteriorating economic conditions with the likelihood that interest rates have peaked will impact the earnings of European banks, and the sector should be sold short, said JPMorgan.

In research published 30 October, Mislav Matejka, JPMorgan’s head of global and European equity strategy, noted that the continent’s banking sector has had a good run in 2023, gaining 8% so far against the STOXX 600’s 1% advance. Indeed the sector has outperformed by 60% since September 2020.