LIVE MARKETS-Are we out of the woods?

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ARE WE OUT OF THE WOODS?

A degree of calm has returned, with volatility gauges retreating after a roller-coaster ride and positive signs prevailing across global stocks following a tariff reprieve for tech. Does this mean we are out of the woods?

J.P.Morgan strategist Mislav Matejka believes it is too early to say markets are out of danger, noting how difficult it is to make any forecast about what's next.

"The extreme equity swings and dramatically changing macro scenarios that are fully dominated by the latest set of news headlines, are all making any firm recession/no recession forecasts perilous," he writes.

The strategist notes that while VIX spikes have historically been followed by positive S&P 500 performance, this trend is less reliable during recessions. He says a recession, at best, is only halfway priced in, pointing out that previous downturns saw the S&P drop an average of 37% from peak to trough.

Matejka argues that current valuation levels are "seen at the start of a downturn, rather than at the end" and that there is still plenty of complacency in the market.

He anticipates buying equities in H2, but wants to see tariff news settle, potential administration changes, and a shift in Fed policy before making any major moves.

"We would stay light on equity risk for the time being."

(Danilo Masoni)

EARLIER ON LIVE MARKETS:

EUROPEAN SOFTWARE: A SECTOR IN LIMBO CLICK HERE

BROAD GAINS LIFT THE STOXX CLICK HERE

BEFORE THE BELL: TECH CHARGES UP, LVMH KICKS OFF EARNINGS CLICK HERE

DOING THE TARIFF TWO-STEP CLICK HERE