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96 Views07 Sep 2026 23:23

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SUMMARY

The US labour day holiday traditionally marks the end of the summer break for markets, especially in the US, which means not only a pick up in liquidity but also something of a shift to a slightly longer term mindset – the summer having been dominated by a lot of short term trading noise, particularly around AI.
At the macro level, July had been a relatively stable month for equity markets, but beneath the surface there had been an enormous amount of volatility, particularly in tech stocks, much of it associated with the market mechanics of distressed selling from margin calls and forced buying from short covering.
There was however another important factor (which we discussed here in Were Style Lags part of the July washout?), which was that passive indexation, once again, triggered some powerful rotations within markets.

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