US stock markets experienced gains, with the S&P 500 rising by 1.4%.
The decline in US 30-year yields, down 12 basis points from their peak, positively impacted global risk sentiment and contributed to the uplift in US equity markets.
Positive Outlook In Us China Relations
There are indications of a potentially positive development in US-China relations, with reports of upcoming phone calls.
Apple, being sensitive to the Chinese market, saw its shares increase by 4.6%, reaching a level close to Wednesday’s high.
We saw equities respond firmly to a notable drop in longer-dated US yields. The retreat in 30-year Treasuries—falling 12 basis points from their peak—helped ease pressure on valuations, particularly in sectors sensitive to interest rate expectations. It also appeared to lift broader global risk appetite, with equity markets outside the US taking some encouragement from the bond market reprieve.
More subtly, the backdrop seems to be influenced by warming signals between Washington and Beijing. Although there are no formal agreements yet, reports of resuming dialogue—particularly at a governmental level—tend to affect sentiment where global supply chains and technology exposure are tied in. That translated into outsized gains in individual equities closely tied to China-facing revenue streams.
Cook’s firm, which typically reacts to any perceived thaw between the US and China, saw noticeable upward movement. The rally pushed the stock within reach of its midweek high watermark, a level that has recently provided short-term resistance. Price action such as this suggests that some market participants may be repositioning based on changing expectations of cross-border cooperation, and the effects such developments might have on earnings paths moving forward.
Market Strategy And Future Outlook
From our perspective, the drop in yields has reopened a potential pathway for appreciation in duration-sensitive assets—though it may be wise to look for evidence that it holds in the days ahead. Week-on-week, there’s been a shift in implied volatility pricing across key index options, particularly along the front end of the curve, which traders will want to monitor. While it may appear things have de-escalated, these changes often remain fragile, and can pivot sharply with the reintroduction of hawkish signals or geopolitical strain.
As we assess positioning across futures and options books, short-term bias has turned marginally longer, with slight contraction in skew, especially in mega-cap tech exposures. This suggests a reduction in downside protection, potentially in anticipation of a calmer period. While this alone doesn’t determine direction, it does provide a hint around current sentiment, with near-dated hedges being rolled rather than rebuilt.
Given how rates and global growth themes are interacting with positioning data, one should be alert for further flattening in sentiment if any scheduled policy commentary deviates from expectations. What appeared to be driving this week’s moves was not a single data point, but rather a vacuum in negative catalysts, allowing for a mild recovery in risk appetite. Movers in the equity complex have been driven less by earnings and more by macro overlays and cross-border speculation.
We’ll be paying close attention to how this plays out into upcoming expiries, with a possible increase in gamma sensitivity near the top range of recent sessions. If we see further drop-off in realised volatility without a corresponding slide in implied, it might create short-term opportunities in straddles and calendar structures. Directional exposure could be approached carefully, with a lean on tactical reactions to rate signals rather than outright thematic trades.
In short, recent market action was supported by very specific factors that came together within a narrow timeframe. Momentum has picked up, but it remains largely anchored to rates and sentiment around trade diplomacy rather than anything fundamentally new in earnings or cash flow outlooks. Instances such as these can unwind quickly. Hence, our approach remains focused yet adaptable.
