LIVE MARKETS-UBS's three "puts" for a market revival

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UBS'S THREE "PUTS" FOR A MARKET REVIVAL

European stocks bounce is relief after days of heavy selling that saw the STOXX 600 shed a fifth of its value, but don't get too comfortable.

UBS sees three "puts" that could augur a market revival - and none of them have happened yet.

They are: the tariff negotiation put, the monetary policy (Fed) put, and a fiscal policy put.

With the latter two far off, the key to a short-term market turn will depend on Trump’s stance toward negotiations, and it's a stance they don't mince their words on.

"What started as a playbook from the Art of the Deal has now morphed into a high-stakes, multi-dimensional power game with significant tail risks on all sides," they write.

So what signs suggest escalation or de-escalation?

UBS's "escalatory path" includes retaliatory tariffs from China (already announced), similar from Europe, additional retaliation from the US and sector tariffs on pharmaceuticals and semiconductors.

De-escalation signs include deals with partners like Vietnam, India and Cambodia, extending the timeline for tariff imposition and constructive negotiations with the EU.

"...while we currently hold a Neutral stance on equities overall, we think another 5-10% drop in the S&P could trigger the Fed put, leading to a short-term market rebound," says UBS.

But a clear bottom will only come with a shift in tariff rhetoric toward de-escalation and lower tariffs.

Without that, it pushes the market closer to UBS's downside

scenario and the S&P 500 toward the 4,000 mark, they say.

The S&P closed Monday at 5062.25.

(Lucy Raitano)

EARLIER ON LIVE MARKETS:

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EUROPE BEFORE THE BELL: BOUNCE FROM 14-MONTH LOWS CLICK HERE

RAY OF HOPE OR FALSE DAWN FOR MARKETS? CLICK HERE