Yesterday, equity indices finished higher. The S&P 500 rose by 0.13%, the Nasdaq 100 gained 0.03%, and the Dow Jones Industrial Average added 0.45%.

Global equity markets are back at record highs. The MSCI All-Country World index added 0.1% to a record level, Asian bourses rose by about 0.7%, joining Wall Street at new peaks. The main engine remains semiconductors: the Philadelphia Semiconductor Index climbed by nearly 6% to a record high, and Asian chip makers followed suit, hitting fresh peaks. Europe is set to open slightly lower, however, geopolitics is reasserting itself.

The AI narrative continues to dominate with extraordinary force. Reuters reports that SpaceX plans an IPO at a $75bn valuation priced at $135 per share. This is another sign of how strong investor appetite for tech is right now. Traders are ignoring concerns about stretched valuations, betting instead on continued corporate profit growth and hopes for a geopolitical settlement.

That said, oil above $97/bbl is a reminder that the settlement is not yet a done deal. US-Iran talks have stalled again, hostilities in the Middle East have resumed, and the market is in a state of cognitive dissonance: equities at records, oil elevated, gold down near $4,465 under pressure from inflation expectations and high rates. Bitcoin slipped to around $67,000.

Yesterday's US labor market data bolstered bulls. The report showed that job openings jumped to a near-two-year high in April and layoffs declined. This signals that the labor market remains resilient despite the energy shock. Today's ADP report is expected to be fairly strong. The week's climax will be Friday's nonfarm payrolls.

The 10-year Treasury yield rose by two basis points to 4.46% — the first of three employment reports this week reinforced the view that the next move under Fed chair Kevin Warsh is more likely to be an interest rate hike than a cut.

In the foreign exchange market, the yen is trading near the psychologically important 160 per dollar level, a break above which typically triggers expectations of intervention by Japanese authorities. Traders are reluctant to push the pair higher, mindful that the Bank of Japan and the finance ministry are watching closely.

Technically, the S&P 500 analysis suggests that the immediate task for buyers is to overcome the resistance level of $7,607. Doing so would confirm further upside and open the path to $7,639. Maintaining control above $7,659 would further cement buyers' positions. On the downside, buyers need to defend the $7,574 area. A break below that level would likely push the index back to $7,547 and open the way to $7,518.