Concerns over volatility and fluctuations are growing in markets

While accelerating inflation in the US, shocks in the artificial intelligence sector, and ongoing geopolitical risks are increasing volatility concerns in global markets, investors have started taking measures against potential fluctuations. The S&P 500 Index completed its sessions without a 1% drop for a long period, while investor focus shifted toward potential sell-offs.

While accelerating inflation in the US and shocks in the artificial intelligence sector impact stocks, some investors have turned to taking positions that potential large fluctuations in tech stocks will spread to wider markets. The S&P 500 Index had gone through 53 sessions without experiencing a 1% decline until Wednesday. This marked the longest period seen since January 2020, while volatility followed both a low and stable course.

Although markets appear calm, volatility has risen in high US Treasury bond yields as well as in artificial intelligence infrastructure and related sectors. Fuel and food inflation caused by the wars in Iran and Ukraine strengthen the pressure on the Fed to raise interest rates. Jeremy Wien, Managing Partner at Moo Point Capital Management, stated that the macro environment remains fragile and that the VIX index does not fully price in the current risk. Meanwhile, Bank of America strategists reported that customers' VIX call option positions have increased sharply.