Some European indices indeed closed the day in the red, also due to a set of terrible-looking PMI numbers — which I will discuss shortly. The DAX lost 0.53%, while the CAC 40 fell 0.39%, swinging between its 50-DMA on the downside and 100-DMA on the upside, somewhat undecided on whether worsening activity could soften the European Central Bank’s (ECB) rate hike expectations in response to an external shock.

But as the session progressed, pessimism over Iran turned into optimism — optimism that the gap between the US and Iran may be narrowing. Some officials made very vague comments that met immediate positive reaction. You know the music.

That helped pull oil prices lower, sending US crude below $100 per barrel and beneath its 50-DMA, easing pressure on yields and supporting US indices, which ended the session in positive territory unlike their European peers.

This morning, US crude consolidates below its 50-DMA, but upside risks prevail. There is a chance that the latest optimism once again ends in disappointment, as has repeatedly been the case over the past three months.

And as we approach the third month anniversary of the war, having watched markets go through an impressive emotional roller coaster, I can say with certainty that the uncertainty won’t disappear until it does.

What is certain, however, is that the clock is ticking louder. Come July, if traffic through the Strait of Hormuz is not fully restored, oil reserves could retreat to alarming levels — a scenario investors have somehow refused to price as the base case. And by September, recession across many global economies could become the base-case scenario.

That would certainly help cap oil prices by lowering demand, and it could also force central banks to rethink the strength of their policy response.

The thing is: none of these scenarios should normally support global equities, which today continue consolidating near all-time highs despite risks that are increasingly materialising — judging by the latest economic data.

Inflation has been rising almost everywhere, including in China, which had been battling falling consumer prices since the post-pandemic period. Although today’s Japanese figures poured some cold water on rising inflation and hawkish Bank of Japan (BoJ) expectations, yesterday’s PMI data confirmed notably slowing activity across major economies alongside rising price pressures.

Many figures pointed either to contraction or a move toward contraction in April as higher costs weighed on activity. US manufacturing PMI stood out in this jungle of weakening data, likely thanks to massive AI infrastructure spending that continues to keep activity afloat.

Outside tech and energy, however, companies are struggling to cope with rising energy costs. Choices are being made: those with little pricing power are cutting activity, while those with stronger pricing power are passing costs on to customers. But all fear rising borrowing costs and tighter financial conditions.

Walmart shares sank more than 7% yesterday despite strong results. US comparable revenue rose more than 4%, while e-commerce sales jumped 26%. Yet the retailer sounded the alarm regarding rising price pressures linked to higher fuel costs. Its CFO highlighted that the average number of gallons customers pumped fell below 10 for the first time since 2022, “indicating stress,” he said. And yes, it does indicate stress. US gasoline prices doubled since the beginning of the year!

AI and technology continue masking the ugly truth of Main Street. A handful of tech firms are carrying the entire US/and global market on their shoulders.

The rally — which had been broadening beyond US tech into the rest of the market — is now under threat. The equal-weighted version of the S&P 500 has once again fallen behind the tech-heavy market-cap weighted benchmark. And at a moment when tech valuations already look stretched, the more likely direction would normally be a correction.

But that will probably not happen today!

IPO excitement is kicking in!

SoftBank jumped 10% today and gained as much as 40% in just three sessions following reports that two of its portfolio companies — OpenAI and SB Energy — are progressing toward US IPOs.

And the IPO market is heating up again for exciting tech companies. Huge listings are being prepared for the coming months, among them OpenAI, Anthropic and SpaceX, all seeking enormous valuations.

SpaceX, for example, is targeting a $2 trillion valuation — roughly two-thirds of the total value of the entire Swiss equity market, including giants like Nestlé, Roche, Novartis and UBS combined. OpenAI and Anthropic are targeting valuations approaching the $1 trillion mark.

And the good news for momentum investors is that today’s indices are increasingly adapting to accommodate these new-generation tech giants much faster than in the past — meaning they could continue fuelling the frenzy once they become publicly traded, at least for a while.

So the chances are that we continue seeing tech stocks go up, up and away.

But what happens once the initial euphoria fades and bubble stress starts creeping back in?

Because note that SpaceX, for example, reportedly plans to make only around 4.3% of its shares available for public trading. That’s extremely low, and historically, a float that small would likely have struggled to qualify for inclusion in an index like the S&P 500. Traditionally, the S&P 500 required sufficient liquidity, a broad shareholder base and a meaningful public float.

Oh well. Times change.

After all, maybe we stop fighting each other, colonise Mars, get served by robots, no longer need money — as Elon Musk says — and live happily and peacefully ever after.