J.P. Morgan Chase warned in Market Intelligence that the next round of sell-offs will not only hit individual stocks hard, but also affect major indices. “The current focus remains firmly on deleveraging AI/technology/momentum stocks. Core concerns include competitive threats from China — that is, open source models and DUV (deep ultraviolet lithography) production, despite another drop in the share prices of Chinese special purpose entities today; in addition, revolving financing and the role of leverage. The widening spread of Nvidia credit default swaps is more worrying than the CDS trend of hyperscale cloud service providers. Since the risk of crowded transactions on our books has not been fully cleared, we continue to maintain factor hedging. It's worth noting that we need to consider whether the next step from here will be accompanied by a significant increase in index correlation.”

J.P. Morgan Chase warned in Market Intelligence that the next round of sell-offs will not only hit individual stocks hard, but also affect major indices. “The current focus remains firmly on deleveraging AI/technology/momentum stocks. Core concerns include competitive threats from China — that is, open source models and DUV (deep ultraviolet lithography) production, despite another drop in the share prices of Chinese special purpose entities today; in addition, revolving financing and the role of leverage. The widening spread of Nvidia credit default swaps is more worrying than the CDS trend of hyperscale cloud service providers. Since the risk of crowded transactions on our books has not been fully cleared, we continue to maintain factor hedging. It's worth noting that we need to consider whether the next step from here will be accompanied by a significant increase in index correlation.”