British stocks are undervalued and represent a golden buying opportunity despite recent market turmoil, two of Wall Street's biggest banks have declared.
Analysts at JP Morgan said London-listed companies looked "exceptionally cheap", while their counterparts at Morgan Stanley said there was a "compelling case" for buying shares in FTSE firms.
The Telegraph reports that the FTSE 100 has been comparatively resilient following a torrid start to the year for stock markets.
The blue-chip index was just over 1% higher at 7,371.46 when it closed yesterday and was almost flat for the year to date after falling less sharply than European bourses in Monday's sell-off.
FTSE 100
The FTSE 100 made a bright start today, being up just over 70 points at 7,442.25 shortly after the market opened.
Graham Secker, Morgan Stanley's chief European equity strategist, said: "Rising real yields benefit (the) FTSE 100, which is one of cheapest global indices by some distance. UK equities are also more defensive than peers, offer twice the dividend yield of global stocks and are a big beneficiary of energy strength."
The FTSE's focus on energy and mining companies are anticipated to help it benefit as investors shun tech stocks and opt for more traditional companies.
Morgan Stanley expects Brent crude oil to hit $100 a barrel later this year, which would benefit energy giants such as Shell and BP - two of the FTSE's biggest companies.
The UK's undervaluation was said to be "striking" on a long-term basis, leaving it as the second-cheapest country in Europe after Spain, based on expected company performance as the pandemic wanes.
JP Morgan reiterated its upbeat view on London-listed stocks, saying: "The UK has for some time significantly lagged other markets and we note is currently trading exceptionally cheap."
Companies reporting today
- Trading updates: CMC, Pets at Home, Sage Group, Wizz Air