Global equities rose on Tuesday, led by US technology and semiconductor stocks. The S&P 500 gained 0.8% and the small-cap Russell 2000 rose 1.8%, while Intel, Qualcomm and Micron climbed 11–13%.
Asian markets also advanced, with Korea up 6% and Shenzhen up 2.5% after a holiday. Korea was up 70% year to date and 180% over the last 12 months.
European Market Divergence
European shares lagged the US over the past month, with the Stoxx 600 up 2% versus a 10% rise in the S&P 500. The difference was linked to sector make-up rather than energy prices alone.
Cyclical sectors and smaller companies also moved higher after US ceasefire comments. Regional banks, materials and industrials rose 1–2%, and the Stoxx 600 added 0.7%.
The article was produced using an AI tool and checked by an editor.
The continued surge in technology, especially semiconductors, suggests maintaining a bullish stance. We should consider long calls or bull call spreads on tech-heavy indices like the Nasdaq 100 (QQQ) or semiconductor ETFs (SOXX). The SOX index, which tracks these companies, is up over 15% in the last month alone, showing powerful momentum that is likely to persist in the near term.
Options Trade Ideas
The rebound in general cyclicals and small caps is a signal that the rally is broadening. This follows last week’s ISM manufacturing report, which surprised to the upside at 51.2, suggesting a resilient industrial sector. We should look at call options on the Russell 2000 (IWM) or industrial ETFs (XLI) to capture this potential catch-up trade.
There is a clear divergence between US and European markets that presents a pairs trade opportunity. The underperformance of the Stoxx 600 is due to its lack of high-growth tech, a structural issue that will not change quickly. Year-to-date, the Nasdaq 100 has outperformed the Stoxx 600 by nearly 12 percentage points, a gap we expect to widen.
We saw a similar pattern in late 2024, where tech led a sharp rally before a brief consolidation. The “jaw dropping speed” of this move means implied volatility is high, with the VIX index holding above 18. This makes selling out-of-the-money put spreads on strong indices an attractive way to collect premium while expressing a bullish view.
