As the week began, equities and technology stocks led record-setting rallies, fueled by cautious optimism over monetary policy support. However, concerns about macro instability and uncertainty returned towards the end of the week, with US-China tensions escalating and President Donald Trump threatening a “massive increase” of tariffs on Chinese goods. These developments led to a sell-off in broader indexes, with Friday’s closing levels setting the stage for potential supply on Monday morning.

The release of FOMC minutes and statements from Fed officials added to the uncertainty, as debates over the pace and magnitude of future rate cuts remain unresolved. Meanwhile, trade war concerns continued to weigh on investor sentiment, with some analysts expecting a welcome excuse for profit-taking and hedging.

According to UBS’s S&T team, the potential supply from levered ETF rebalancing could reach $18 billion for sale, partially offset by dealer long gamma positioning triggering buying. However, the exact amount of supply that will come into the close and Monday morning is still uncertain.

The ongoing trade tensions between the US and China have had a significant impact on global markets, with investors growing increasingly cautious and sensitive to any developments in the situation. As a result, the tech sector has been particularly vulnerable to swings in sentiment, with some single stock dispersion evident below the surface.

Despite these challenges, some analysts remain optimistic about the long-term prospects of technology stocks, citing their resilience and adaptability in the face of adversity. However, for now, investors appear to be taking a cautious approach, with the focus on risk management and hedging against potential downside.

The ongoing trade tensions between the US and China have created a complex and uncertain environment for global markets, with tech stocks particularly vulnerable to swings in sentiment. While some analysts remain optimistic about the long-term prospects of technology stocks, investors appear to be prioritizing risk management and hedging against potential downside in the near term.