Analysts at JPMorgan named five global stocks in a sector they described as being in “pole position,” following the Federal Reserve ‘s latest rate hike. On July 26, the Fed approved its 11 th interest rate hike in a tightening process that began in March 2022, taking borrowing costs to their highest level since 2001. With that move, “the Fed is potentially at the end of its rate hiking cycle. We address which sectors typically lead in the aftermath of the last Fed hike, Staples and Healthcare are in pole position,” the analysts led by Mislav Matejka stated in a July 31 note to investors. JPMorgan is overweight on consumer staples. “Sector is one of the best performers around the last Fed hike in the cycle, lower bond yields and better relative [earnings per share] momentum should further support,” the bank said. Top picks The analysts named five consumer staples stocks they expect to outperform in the next six to 12 months, including them on a list of top European picks. The bank gave French food manufacturer Danone an estimated 6% earnings per share (EPS) growth for 2024, and Swiss competitor Nestle 8% for the same period. British grocer Tesco also made the outperform list, although the bank estimated a 2% reduction in EPS for 2024. Dutch retailer Ahold Delhaize is also a staples sector pick, with 7% estimated EPS growth for 2024. Budweiser brewer Anheuser-Busch InBev was named by JPMorgan too, with the bank estimating EPS growth of 18% for next year. The federal funds rate — the Federal Reserve’s benchmark interest rate — sets what banks charge each other for overnight lending, and is monitored by investors because of its potential effect on markets. — CNBC’s Michael Bloom and Jeff Cox contributed to this report.
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