Market Sentiment - TS Lombard reports that the threat of tariffs from the US on China appears increasingly unlikely, boosting risk appetite [1]

StoneX's senior advisor Jon Hilsenrath discusses how the Fed is thinking about rate cuts, the labor market, and inflation. Retail investors have seen better returns than industrial investors, but they show a big appetite for risk. Our guests discuss retail investors' returns and risk appetite. For more Morning Brief: Market Sunrise videos, please visit: https://finance.yahoo.com/videos/series/morning-brief-market-sunrise/ #youtube #stocks #investing About Yahoo Finance: Yahoo Finance provides free stock tic ...

Investor Behavior - Retail investors exhibit a higher risk appetite [1] - Retail investors aggressively pursue volatility [1] Market Dynamics - Combining capital, audience, and enthusiasm leads to unique outcomes [1]

Market Trends - Global risk appetite strengthened [1] - Crypto pushed higher [1] - Asian equities pushed higher [1] - Gold futures pushed higher [1] - Oil headed for its steepest weekly decline since June [1]

Core Viewpoint - The S&P 500 and Nasdaq-100 indexes are nearing all-time highs, prompting investors to consider whether bullish outlooks are already reflected in market valuations. While there are reasons for potential price increases, it is also essential to explore hedging strategies for current portfolios [1]. Group 1: Reasons for Bullish Outlook - Three key factors are expected to influence investor behavior towards the SPDR S&P 500 ETF Trust in the coming months [2]. - The Commitment of Traders report indicates that commercials, such as banks, hold long positions at a concentration not seen this year, while speculators are at their shortest positions, suggesting a potential for upward movement in the S&P 500 [4][5]. - A significant short dollar position may lead to a "short squeeze," which could further drive the dollar's value up, positively impacting consumer and business spending, and consequently, the stock market [6][7]. - The performance of growth stocks over value stocks indicates a high risk appetite among investors, suggesting confidence in continued economic growth and higher valuations [8][9]. Group 2: Alternative Investment Strategies - The iShares Russell 2000 ETF, focusing on small-cap stocks, has underperformed the S&P 500 by 15% over the past year, presenting potential opportunities for investors if the market shifts [10]. - Small-cap stocks may offer downside protection due to their current discount relative to larger indexes, making them a safer bet in uncertain market conditions [11][12]. - The iShares 20+ Year Treasury Bond ETF could provide an additional layer of protection and upside potential, especially if the Federal Reserve cuts interest rates before the end of 2025 [13][14].

Hong Kong’s equity benchmark is heading for its highest close since February 2022, reflecting a rebound in risk appetite on signs of easing US-China trade tensions https://t.co/SJI0fDQ7ee ...

Core Insights - Jim Wyckoff has over 25 years of experience in stock, financial, and commodity markets, including roles as a financial journalist and market analyst [1][2] - He has covered all futures markets traded in the U.S. and has worked with various financial news and advisory services [1][2] Company and Industry Summary - Jim Wyckoff operates the "Jim Wyckoff on the Markets" analytical, educational, and trading advisory service, providing insights into market trends [2] - He has held positions as a technical analyst for Dow Jones Newswires and as a senior market analyst with TraderPlanet.com, showcasing his expertise in market analysis [2] - Wyckoff is also a consultant for the "Pro Farmer" agricultural advisory service, indicating his involvement in agricultural market analysis [2] - He was the head equities analyst at CapitalistEdge.com, further emphasizing his extensive background in equity markets [2] - Daily market updates and technical analysis are provided by Wyckoff on Kitco.com, highlighting his ongoing engagement with market participants [3]

Investment Rating - The report maintains a Neutral rating across equity regions to maximize diversification, with a shift to a more defensive asset allocation [4]. Core Insights - The market experienced a significant sell-off following the announcement of a reciprocal tariff policy by the US, leading to an 11% drop in the S&P 500, marking one of the largest two-day declines since the Great Depression [2][9]. - The Risk Appetite Indicator (RAI) saw one of its largest two-day drops since 1991, indicating a broad 'risk-off' sentiment across assets, with the RAI closing at approximately -1.4 [3][4]. - Historically, RAI levels near or below -2 have indicated better opportunities to 'buy the dip', with a hit ratio of over 90% for positive S&P 500 returns in the subsequent 12 months from such levels [3][4]. Summary by Sections Market Reaction - The S&P 500's drop of 11% since the tariff announcement is the fifth largest two-day drop since the Great Depression, with US equities leading the sell-off across assets [2][9]. - Non-US equities initially reacted less sharply but saw accelerated declines later, while credit spreads widened, indicating increased credit beta to the equity sell-off [2]. Risk Appetite Indicator - The RAI dropped to around -1.4, with a tendency to bottom lower during previous market sell-offs, suggesting potential buying opportunities when it reaches levels near or below -2 [3][10]. - The credit component of the RAI fell rapidly, closing the gap with the equity component, although credit is still pricing a low probability of recession [3][4]. Asset Allocation - The report indicates a shift to a more defensive asset allocation, moving from Overweight (OW) equities to Neutral (N), while maintaining OW in bonds and underweight (UW) in credit [4][19]. - The probability of a sell-off for equities is now above 40%, driven by worsening market sentiment [4].