Monday’s trading session might be facing a downward trend, according to JPMorgan Chase & Co. (NYSE:JPM)’s latest market insights. The firm has adopted a tactically bearish stance due to the ongoing trade war and retaliatory measures by other countries.
JPMorgan analysts forecast that the uncertainty surrounding the trade conflict is likely to persist into the second quarter of 2025. The current trade tensions have cast doubt on the potential positive effects that the upcoming earnings season or macroeconomic data might have on the markets.
Despite the market’s recent sharp 11% drop over the past two days, JPMorgan suggests that certain technical indicators are signaling the possibility of a short-term relief rally.
Investors looking for further analysis and strategy discussions may benefit from a call with JPMorgan’s Positioning Intelligence team, including experts such as Manish and Jason Hunter.
In response to the expected volatility and headline risks, JPMorgan recommends investors adopt trading strategies that can navigate the unpredictable market. The firm’s "Monetization Menu" suggests a preference for pair trades that express risk with a net-short bias.
Initial trade ideas that may align with consensus views include favoring defensive sectors over cyclicals, gold and silver over basic materials equities, utilities over energy, investment-grade credit over U.S. equities, and treasuries over U.S. equities.
On a geographic level, Latin America is seen as potentially benefiting from the situation due to lower tariffs, higher commodity prices, and a weaker dollar.
JPMorgan suggests clients might consider pairing a long position in Latin American markets with a short position in Southeast Asian markets as a strategic move during these volatile times.
