Analysis: Rising hedging demand suggests future stock market volatility will increase

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ME News message, July 20 (UTC+8). Foreign media analysis pointed out that the stock market’s upward momentum is weakening, while optimistic earnings expectations are being closely watched—two signs that suggest the summer could be volatile. As investors face growing concerns, overall bullish sentiment is being challenged, and market volatility is quietly rising. The closing out of AI-related trades is triggering a strong market rotation, and demand for hedging is rising rapidly. The Nations SkewDex Index (measuring the tail risk that the S&P 500 index may face) has surged to its highest level since April, which could further push up other volatility indicators. Although the panic index remains below 20 and is far from a worrying level, the sharp volatility of individual stocks is blurring the broader trend. Prices of core AI-related stocks that drive momentum trading are becoming more volatile, but unlike the first half of this year, the narrative of “stocks rising, volatility increasing” seems to no longer hold—replaced by a scenario where stock prices plunge sharply while volatility continues to climb. (Jin10) (Source: ODAY)
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