The month-end inspired rebalancing sell-off did not last long as the S&P rebounded 0.8% overnight, serving up a fresh record high in the process.

The technology and materials sectors pushed the S&P 500 to a new record. Zoom Video’s earnings led to a surge in work-from-home stocks. China factory data signalled an uptick in global demand.

Zoom Video Communications delivered the second-largest sales surge among Nasdaq 100 companies last quarter, providing an emphatic demonstration that businesses and consumers have continued to flock to the video-meeting service in even larger numbers expected. Shares soared as much as 47%.

Indeed, the intraday recovery propensity remains alive and well supported by cash on the sidelines. And with the US Federal Reserve always reminding us that interest rates will stay low for longer, systematic risks remain low, and cash level remains high.

The month-end slide did augur well as a buy-the-dip opportunity to establish long equities and short volatility positions.

The move higher in FAANGs remains relentless. And do not even try to rationalize it against the backdrop of Main street woes. Sentiment remains extremely bullish, and I am repeatedly told there are no alternatives as “tech is the only game in town”.

The recent monstrous moves in Tech stocks these days borders on complete insanity for some, but clearly, it continues to work.

Forex markets

The European Central Bank (ECB) meeting will most certainly address the robust EURO after Consumer prices in the 19-nation euro area fell for the first time in four years, highlighting that a recent rebound in economic activity hasn’t managed to offset the pandemic’s profound impact on demand.

The inflation rate missed economists’ median estimate as it came in at -0.2%.ECB needs to watch markets closely as the EU zone is on the precipice of falling into a deflationary trap compounded by nominal FX appreciation.

I don’t think central banks around the world are going to sit back idle and watch their currency weaken in the midst of a pandemic when manufacturing exports are already in the tank. The Fed’s announcement represents a dovish structural shift and can be interpreted as the next phase of the global currency wars when looked at through an FX lens.

Gold trades lower

Gold is trading lower on the back of a strong US dollar an a much better than expected read than expected on the US manufacturing ISM.

There is moderately bearish seasonality for gold in September, with the metal has gone down about 2% on the month over the last five years on average. The pace of gold accumulation via ETF instruments seems to have slowed down slightly over the previous couple of months, while fast-money positioning is probably still relatively elevated long contacts.

I would be biased to trade the metal from the short side from here, as I suspect the 6-8% correction at one point in the last month might leave the asset scarred for a little longer.

International markets analysis and insights from Stephen Innes, Chief Global Market Strategist at AxiCorp