Thematic ETF Daily Trading Outlook

March 5, 2026

S&P futures are little changed in Thursday morning trading following Wednesday’s rebound in U.S. equities, where a number of crowded momentum trades reversed sharply higher. Memory, semiconductors, software, private equity, managed care, and biotech were among the biggest gainers after selling pressure earlier in the week tied to geopolitical risk and positioning unwinds.

Global markets were supportive overnight. Asian equities rallied strongly, led by an 8%+ rebound in South Korea, while Japan gained roughly 1.5%. European markets are also firmer, rising about 0.4% in early trading.

Cross-asset signals are mixed but broadly stable:

The dominant macro narrative remains geopolitics through the energy channel. The Strait of Hormuz remains largely closed, tanker insurance costs have surged, and production shut-ins continue to appear across the region. Despite this, crude prices have not yet reached levels that materially threaten the current macro narrative.

Economic data has also supported the market’s resilience. Earlier this week:

• ISM Manufacturing remained in expansion for a second straight month.
• ISM Services printed 56.1, the strongest reading since August 2022.
• ADP private payrolls rose 63K, exceeding expectations.

Together these releases reinforce the prevailing market thesis of moderate growth and easing inflation, which continues to underpin expectations for eventual Federal Reserve easing later this year.

In short, the market is balancing two competing forces:

1. Geopolitical risk through oil prices, which could reaccelerate inflation.
2. Strong macro data and corporate earnings, which continue to support equity valuations.

So far, investors are leaning toward the resilience narrative, treating geopolitical shocks as temporary disruptions rather than structural threats to the economic cycle.

Thematic Tail of the Tape

For thematic investors, the most important signal from yesterday’s tape was the sharp reversal in crowded momentum trades, particularly across the AI infrastructure ecosystem. Semiconductors, memory, and software rebounded after earlier liquidation, highlighting how much of the recent volatility was driven by positioning rather than deterioration in fundamentals.

Corporate developments reinforced the durability of the AI investment cycle. Broadcom reported strong AI sales and raised guidance, while announcing a $10B buyback program, supporting the view that hyperscaler demand for AI infrastructure remains robust.

At the same time, several developments reinforced structural investment themes:

• Energy security and geopolitics: disruptions in Middle Eastern shipping routes and oil production underscore the long-term investment case for energy infrastructure, nuclear power, and defense spending.
• Artificial intelligence infrastructure: continued partnerships, data center investment, and semiconductor demand suggest the AI buildout remains in its early stages.
• Digital assets: the sharp rally in crypto-linked ETFs highlights how sensitive those themes remain to shifts in liquidity and risk appetite.

The result is a thematic landscape where AI infrastructure, energy security, and digital assets remain the dominant drivers of dispersion, while defensive themes lag during risk-on rotations.

Performance — Top 5 ETFs (1D)

Performance — Bottom 5 ETFs (1D)

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Fund Flows — Top 5 Inflows (YTD)

Fund Flows — Top 5 Outflows (YTD)