Core Viewpoints - The market experienced a rapid decline after tariff shocks in April, but liquidity began to stabilize, leading to a rebound from the bottom. Short-term overseas risks are gradually easing, yet corporate earnings data from Q1 and April PMI indicate no improvement, limiting the market's willingness to engage in fundamental trading until clear tariff or policy stimulus turning points are observed. However, market trading activity remains decent, with thematic trading and rotation between high and low sectors likely to be the main trading strategies moving forward. The structural recovery of risk appetite in May may present trading opportunities [1] Macroeconomic Outlook - Domestic economic indicators from April, including PMI and real estate surveys, show relative pressure. The manufacturing PMI fell to 49%, a decrease of 1.5 percentage points from the previous month, indicating a decline in manufacturing sentiment. Large enterprises report manageable risks related to exposure to the U.S., but many small enterprises face significant challenges in the supply chain. Real estate sentiment is weak, with Morgan Stanley's survey indicating a lack of confidence in price expectations and sales plans. On a positive note, consumption data during the "May Day" holiday was strong, and infrastructure remains resilient, suggesting a short-term stable economy with anticipated pressures ahead [2] Overseas Economic Context - The U.S. economy also shows short-term stability, with resilient core GDP and stronger-than-expected non-farm payroll data indicating limited negative impacts from tariff policies. Market expectations for a Fed rate cut have been pushed to July, and easing trade tensions have led to a recovery in U.S. equities. The S&P VIX index is gradually declining, reflecting a recovery in global risk appetite. However, Asian currencies are appreciating against the dollar, and gold has shown signs of adjustment, indicating ongoing impacts from tariffs on global asset classes. The potential for a rebound in risk assets exists, but its duration will depend on future tariff negotiations [3] Market Outlook - The risk appetite may continue to recover, with the TMT sector showing greater elasticity. The A-share market remained in a narrow trading range, while U.S. and Hong Kong stocks showed signs of recovery. For the market to achieve further recovery or new highs, one of the following conditions must be met: 1) a tariff agreement with lower rates; 2) domestic policy stimulus to offset tariff impacts; 3) synchronized rate cuts by China and the U.S. However, achieving these conditions appears challenging, suggesting limited upward potential and a likelihood of continued narrow fluctuations. The willingness to engage in fundamental trading is weak, but thematic trading and sector rotation may dominate future market activity, particularly in TMT sectors [4][5] Market Style - The recent Politburo meeting indicates strong mid-term policy support, suggesting a favorable environment for TMT and similar sectors. The market is in a recovery phase, with small caps outperforming large caps and growth stocks outperforming value stocks. With earnings growth still in negative territory post-earnings season, value styles reliant on earnings growth lack upward momentum, increasing the likelihood of a rotation between large and small caps. The investment strategy may focus on a "value dividend + TMT theme" approach, with high-quality, high-dividend assets expected to offer stable yields, particularly in sectors like banking and public utilities [5][6]