Strategies for navigating market volatility in the post-US election landscape

Following the US election, Mila Kuznetsov of S&P Global Market Intelligence shared her perspective in a Risk.net webinar discussing market volatility. This article examines the key themes of the webinar, including inflation risks, commodities, geopolitical uncertainty, and environmental, social and governance considerations, as well as the role of advanced analytics in investment strategies

The panel

Hamza Bahaji, Head of financial engineering and investment solutions, Amundi Asset Management

Florian Ielpo, Head of macro, Lombard Odier Investment Managers

Kathryn Kaminski, Chief research strategist and portfolio manager, AlphaSimplex Group

Moderator: Mila Kuznetsov, Head of business development, Derivatives Data and Valuation Services, S&P Global Market Intelligence

In an era marked by persistent inflationary pressures, geopolitical uncertainty and rapidly evolving investment tools, the financial landscape is anything but static. These challenges and opportunities were the focus of a recent Risk.net webinar, Risk and return: volatility strategies for uncertain times, sponsored by S&P Global Market Intelligence. Featuring insights from industry leaders, the discussion explored how investors and institutions are adapting to ongoing economic shifts and client demands. Mila Kuznetsov, head of business development for Derivatives Data and Valuation Services at S&P Global Market Intelligence, provided her take following the US election.

Inflation volatility as a core market risk

Inflation’s resurgence remains at the forefront of market concerns. Florian Ielpo, head of macro at Lombard Odier Investment Managers, set the tone early in the webinar by emphasising inflation’s significant impact: “Inflation is the most priced risk at the moment. We’re seeing signals of rebuilding inflation pressures, first in the US, but likely soon in Europe and the UK as well.”

However, it is not just inflation itself, but its unpredictability that worries many. Katie Kaminski, chief research strategist at AlphaSimplex Group, expanded on this point: “It’s not just higher inflation; it’s about the volatility of inflation. Timing and strength remain uncertain, creating cross-asset volatility.”

Reflecting on these insights, Mila Kuznetsov emphasised how these risks resonate with S&P Global’s clients today: “The uncertainty surrounding inflation is magnified by tariff policies and protectionist trends following the US election, and globally as well, which are influencing market sentiment and driving inflation volatility.”

This underscores the ongoing significance of the panellists’ concerns, as inflation volatility continues to be a major driver of market disruption and uncertainty, even in the post-election environment.

Commodities as the natural inflation hedge

With inflation taking centre stage, commodities have emerged as a critical tool for hedging. Kaminski identified the sector’s potential during the webinar: “Commodities are tightly linked to global macro themes, and their volatility offers investors opportunities in areas such as energy, base metals and agriculture.”

Ielpo echoed this sentiment, describing commodities as a historically effective hedge against inflationary shocks: “Inflation hedges such as commodities are currently showing high carry and protective value. They are a key component in portfolios addressing growing inflation risks.”

Kuznetsov tied this to how client strategies have evolved: “We’re seeing firms move beyond exchange-traded commodities into over-the-counter products, and institutional investors moving to more physical trading, to leverage commodity volatility as a natural inflation hedge.”

This shift reflects a growing recognition among investors that traditional exchange-traded strategies are no longer sufficient to manage the complexities of inflation volatility, pushing them towards more flexible and diversified approaches to mitigating risk.

Navigating market volatility with 0DTE options

Market volatility was another central theme, particularly as investors seek strategies to manage intraday risks. Zero days to expiration (0DTE) options were identified as a rising trend, enabling investors to quickly react to unfolding events. Kaminski highlighted the agility such tools bring. “Trend-following strategies and instruments such as 0DTE options allow investors to capture dislocations as they happen, providing a crucial edge in today’s fast-moving markets,” she noted.

Kuznetsov expanded on this by describing how S&P Global is supporting clients in adopting these tools. “0DTE options allow for trading on intraday news, and beyond equities we also see more market participants building strategies around central bank announcements and other significant events in rates and foreign exchange,” she said.

These innovations are already being integrated into client strategies, with many now leveraging 0DTE options to capitalise on real-time market movements. By shifting to more immediate, event-driven trading, investors are better equipped to navigate this volatility.

By leveraging data, innovative strategies and cross-asset insights, we’re helping clients find clarity in [times of] uncertainty

Mila Kuznetsov, S&P Global Market Intelligence

Geopolitics and protectionist policies

While much attention was paid to inflation, the discussions also highlighted the broader geopolitical landscape, including trade wars and global conflicts. Hamza Bahaji, head of financial engineering at Amundi Investment Solutions, identified geopolitical risks as a critical factor influencing markets.

“The US elections and protectionist policies have far-reaching implications – from tariff wars to shifts in corporate earnings growth and climate regulation,” he said.

Kuznetsov explained how these risks have remained top of mind for investors: “Protectionist measures, US-China relations and ongoing conflicts, such as those in the Middle East and Ukraine, are reshaping global investment flows and driving demand for insights on potential dislocations and early signals that can be seen in derivatives markets,” she observed.

As investors grapple with these geopolitical risks, the demand for strategic insights has never been higher, with many now recalibrating their strategies to account for an increasingly fragmented and unpredictable global economy.

ESG and the growing influence of climate risk

Environmental, social and governance (ESG) considerations remain a prominent theme in terms of investment trends and broader market dynamics. Bahaji highlighted the potential impact of shifting US climate policies, noting: “A step back from climate regulations, such as the Paris Agreement [on climate change], could disrupt the rapidly growing ESG investment landscape, particularly in equity futures and climate-linked bonds.”

Kuznetsov extended the discussion by emphasising the interconnectedness of sustainability and market strategies: “Beyond climate-linked bonds, climate risk’s impact can really be seen in agriculture derivatives such as cocoa and coffee.”

ESG considerations are being factored into investment decision-making. As panellists noted, these risks are now essential in shaping long-term portfolios, with investors adjusting their strategies to address the growing intersection of ESG and market dynamics.

Opportunities amid complexity

Despite these challenges, the webinar highlighted areas of opportunity for investors willing to adapt. Kaminski pointed to equities as a potential bright spot, driven by the fading likelihood of a recession. “Positive signals in equities and divergence in economic growth across geographies are creating relative value opportunities for investors.”

Ielpo, meanwhile, emphasised fixed income: “As fiscal premiums stabilise and yields remain high, we see fixed income markets shaping up to be one of the most attractive opportunities in the coming months.”

Kuznetsov discussed the resurgence of niche strategies, such as dispersion and autocallables, tying them to client demands. “Dispersion strategies are making a comeback, alongside an increased focus on cross-asset correlations. These tools are helping investors capitalise on market divergences and relative value opportunities,” she noted.

Informing strategy with data and analytics

The ability to respond effectively to market risks depends on robust data and analytics. Bahaji highlighted the role of alternative data, revealing: “We’re using NLP [natural language processing] models to analyse retail investor sentiment from chat platforms and forums. This helps adjust equity strategies to account for optimism or pessimism in specific sectors.”

Kuznetsov emphasised the pivotal role of derivatives data and valuations in S&P Global’s approach to market risk management: “As market dynamics shift, so must our derivatives service, so we can provide better and faster actionable insights. We are always improving our services to meet client needs for timely, high-quality data and pricing, from vanilla to complex derivatives strategies.”

The integration of data-driven insights with practical strategies highlights how advanced analytics are transforming decision-making, allowing investors to be proactive in navigating a complex and volatile financial landscape.

Conclusion

From inflation volatility to geopolitical uncertainty and the rise of innovative tools such as 0DTE options, the financial landscape remains highly dynamic. As investors confront these challenges, the ability to adapt has become essential. Kuznetsov summarised: “Transparency and adaptability are paramount as clients navigate this complex environment. By leveraging data, innovative strategies and cross-asset insights, we’re helping clients find clarity in uncertainty.”

This approach is evident across the industry, where market participants are recalibrating their strategies in response to an unpredictable market. By using advanced tools and data analytics in real time, investors are shaping their investment decisions and risk management strategies to stay ahead in an increasingly volatile environment.

Learn more

Watch to the full webinar: Risk and return: volatility strategies for uncertain times

The panellists were speaking in a personal capacity. The views expressed by the panel do not necessarily reflect or represent the views of their respective institutions.

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