Insights 
VT 
UBS has revised its outlook on US equities from Attractive to Neutral. The recent market rally, with the S&P 500 rising 11% since 10 April, has eliminated much of the earlier pessimism related to the White House’s tariffs.
The investment bank initially upgraded US stocks, anticipating an overreaction to trade risks. With market sentiment improving and valuations stabilising, UBS now views the risk-reward balance as even.
Cooling Off Period
UBS noted that the 90-day cooling-off period between the US and China has eased tensions. However, there remains uncertainty about whether this temporary truce will lead to a lasting agreement.
While acknowledging a positive tone in negotiations, UBS is cautious about potential obstacles and possible market volatility. Importantly, UBS clarifies that it is not adopting a bearish stance.
It continues to advise maintaining a full strategic allocation to US equities. The bank predicts that stocks will increase over the next year.
What this all translates to is a formal admission that the earlier call of ‘Attractive’ no longer holds the same weight under current conditions. The earlier optimism, triggered by falling prices and fears overshooting reality, has now been tempered by a swift market comeback. As the S&P 500 has recovered strongly—up over 11% in a matter of weeks—the opportunity-to-risk ratio has flattened. Traders who were once rewarded for stepping in when many were retreating now face returns that are more closely matched to underlying risks.
Market Direction And Strategy
As we parse this, what UBS implies is that while the broader direction of markets may remain upward over the next twelve months, the easy gains from buying on anxiety have likely passed. The market has digested the shock of trade policies faster than expected, and with equities now less cheap, short-term valuations no longer favour aggressive positioning. The truce in trade tensions, though welcomed, is still subject to the fragile nature of international diplomacy.
From our seat, that means being nimble. With the official stance now recalibrated to Neutral, portfolio strategy should lean towards moderation. There’s little reward now in overweight exposure based on old fears that have already subsided. Instead, the question becomes how to hold your line without being lulled into either complacency or overconfidence. Spin-offs from policy talks, a stray comment from either side of the Pacific, or a domestic data point veering off-course—all carry potential to shake sentiment again.
The firm’s clarification that it hasn’t turned negative is important. It’s not about a retreat, but rather a shift in expectations. Holding steady with existing US positions—and resisting the impulse to amplify them—is the message. They expect gains, yes, but not in a straight line and not without some turbulence.
So in practice, we’d say patience and monitoring are preferable here to reaction. Don’t abandon positions, but let fresh allocation decisions hinge on clearer catalysts. Watch short-term sentiment, but don’t build full trades on it. Avoid chasing momentum from the latest bounce—it’s mostly played out. Allocation discipline matters more now.
