Insights 
The week has been positive for stock markets amidst the easing of US-China tensions. The S&P 500 has reached a new session high, rising by 33 points or 0.6%.
Later in the week, trading volumes have decreased, yet the momentum in trades persists. The trajectory suggests there is little obstructing a return to February’s highs.
Additionally, the AI sector is experiencing a revival in trade activity.
Investor Confidence Increases
What we’ve seen so far this week is a boost in investor confidence, largely stemming from the moderation in political friction between the two largest economies. Equity indices have responded with upward movement, not least the S&P 500, which climbed steadily through the session. A 0.6% rise at this point in the cycle is not groundbreaking by itself, but when paired with the wider market sentiment, it gives us a fairly clear read on risk appetite.
The diminishing of trade volumes later in the week is fairly typical for this time of year, especially ahead of earnings seasons or major macroeconomic releases. Low volumes can exaggerate price moves, usually making patterns less reliable, but interestingly, the market’s upward bias remained intact. That’s something we watch carefully — the difference between a pullback due to weak participation and one sparked by fading conviction.
Then there’s the renewed activity in artificial intelligence-related stocks. What had been an overstretched part of the equity market earlier this year is now drawing fresh interest. Part of that probably comes from the latest round of corporate updates, which hinted at stronger development along product lines tied to machine learning applications. While valuations may not make sense when viewed through a traditional lens, price action suggests the appetite for tech-focused bets hasn’t cooled for long.
Market Positioning And Volatility
From our perspective, these developments are not isolated. Until recently, we’d seen mixed signals across asset classes — defensive sectors rising alongside cyclicals, and macro data providing conflicting indications. However, this week offers something clearer: a reassertion of positioning favouring growth, albeit cautiously.
Looking at implied volatility, we noticed it hasn’t spiked in response to positioning shifts, which implies that the market isn’t pricing in unexpected shocks in the very short term. From a tactical standpoint, that provides an advantage when deploying directional positions. Straddles, for example, may be less attractive in the immediate term due to compressed premiums. One may consider calendar spreads or other strategies that benefit from divergence between realised and implied readings over time.
Powell’s comments earlier in the week were measured, but they offered just enough assurance that policy may not tighten further in the near term — and that, in turn, removed an overhang for assets sensitive to rate movement. It’s telling that yields retreated even without a formal shift in stance. Sometimes the absence of tightening can act like easing.
