In March 2026, the key variables in the US equity market were the dual repricing of geopolitics and the policy path. Escalating tensions in the Middle East pushed energy prices higher and lifted inflation risk premia, while mixed macro data led to significant swings in expectations for the rate path. As a result, risk assets entered a phase characterized by high volatility and only weak recovery.

From a market structure perspective, March was not driven by a single directional trend but by a macro shock that pushed correlations higher. Pricing became more sensitive to developments in the conflict, oil-price moves, interest-rate expectations, and changes in the risk premium, reducing the effectiveness of diversification as a hedge. In such an environment, simply betting on trend direction is not sufficiently stable. What matters more is systematic risk control, volatility-sensitive position management, and the ability to capture transitional market trends dynamically.

We do not believe that this round of adjustment signals any reversal in the long-term AI investment thesis. What changed instead was the market's tolerance for elevated valuations and crowded positioning. Looking ahead, if geopolitical risk eases at the margin and inflation expectations become more anchored again, technology assets that were previously suppressed by sentiment may still have room to repair. At the same time, persistent volatility and sector rotation are likely to remain, creating an environment in which quantitative strategies can continue to adapt and capture opportunities.

Risk disclosure: Market fluctuations may cause investment outcomes to vary. Investors should make rational decisions based on their own risk tolerance. This article is for general information only and does not constitute investment advice, an offer, or a solicitation. Past performance is not indicative of future results.