Key takeaways
- Global equities climbed to fresh record highs as the AI infrastructure supercycle continued to dominate market sentiment, with hyperscalers projected to spend up to $1 trillion on AI capex by 2027.
- Markets remain highly sensitive to conflicting US-Iran peace deal headlines, driving sharp volatility in oil prices, bond yields, and broader risk sentiment across global asset classes.
- Sticky inflation and increasingly hawkish central bank rhetoric have reinforced expectations of prolonged restrictive monetary policy, with traders now pricing higher odds of Fed and ECB rate hikes.
- Chart of the day: Nikkei 225 at risk of corrective pull-back below 65,665 key short-term resistance.
Top macro headlines
- World stocks advance to record heights: Global equity indices, including the S&P 500, Nasdaq, and MSCI All Country index, eked out fresh record highs. The momentum remains strongly supported by an unyielding AI infrastructure supercycle that continues to overrule broader macroeconomic headwinds.
- US-Iran peace progress met with extreme skepticism: Volatility continues to rock the energy sector amid conflicting headlines regarding a breakthrough in the Middle East. While Iranian state media cited an unofficial memorandum of understanding to reopen the Strait of Hormuz within a month, the White House forcefully rejected the report, calling it a “complete fabrication.”
- Trillion-dollar tech IPO pipeline expands: Speculation surrounding Elon Musk’s public market footprint is heating up as SpaceX prepares to debut on the Nasdaq on June 12, targeting a valuation between $1.75 trillion and $2 trillion. Rumors are intensifying that Musk may eventually move to merge Tesla and SpaceX/xAI to build a unified AI giant. Concurrently, OpenAI and Anthropic continue to pursue substantial private and public funding sources.
- Central banks implement hawkish directives: Global monetary policy cycles are shifting aggressively toward headwinds. Following recent rate hikes in Australia and Norway, the Reserve Bank of New Zealand kept rates on hold in a highly contested split decision that points to imminent hikes. Simultaneously, European Central Bank officials delivered strong hawkish guidance, emphasizing that rate hikes should proceed regardless of Middle East peace outcomes. The short-term interest rate swaps market is now showing increasing odds of a 25-basis-point hike from the ECB in June.
Key macro themes
- AI Capex Supercycle vs. Dotcom Bubble Parallels: Cloud hyperscalers are projected to pour over $850 billion into AI infrastructure this year and up to $1 trillion in 2027. While the massive capital expenditures are absorbing enormous amounts of operational cash flow and driving up corporate debt, analysts from Goldman Sachs emphasize that a market crash is not imminent, as these tech giants are delivering concrete, strong earnings growth compared to the speculative late-1990s dotcom mania.
- The repricing of Fed trajectory before key PCE: Heading into Thursday’s highly anticipated April PCE report, the first major inflation data of the new Fed Chair Kevin Warsh era at the Fed, economists expect headline annual PCE to accelerate to 3.8% y/y and core annual PCE to jump to 3.3% y/y. Sticky inflation and the ongoing war shock have completely erased 2026 rate cut hopes, with Fed funds futures traders now pricing in a 60% probability of an active Fed interest rate hike by year-end.
- The sovereign yield burden & corporate debt safe havens: Due to sticky inflation, deteriorating public finances in Washington, and massive upcoming Treasury coupon supply, investor sentiment toward U.S. sovereign debt has soured. Consequently, fund managers are increasingly eschewing Treasuries to flock into top-tier, blue-chip U.S. corporate debt, as corporate America’s balance sheets increasingly look more sound than Washington’s debt.
Global market impact (last 24 hours)
Equities: Wall Street was mixed but steady; the Dow Jones and Russell 2000 notched new record highs, while the S&P 500 and Nasdaq finished basically flat. Gains were led by consumer discretionary (+1.9%), with United Airlines gaining 6%, while software and chip names consolidated, with Qualcomm dropping 6%, and Nvidia slipping by 1%. Europe closed flat, and the UK FTSE gained 0.1%.
Fixed Income: U.S. Treasury yields eased slightly by 1-2 basis points. A heavy multi-billion dollar 5-year sovereign note auction registered acceptable investor demand ahead of top-tier PCE inflation data due later today.
FX: The U.S. Dollar Index (DXY) remained mostly flat. The New Zealand Dollar (Kiwi) skyrocketed by 1.0% to emerge as the largest G10 mover following the hawkish RBNZ split decision. The Japanese Yen slumped to a fresh 4-week low toward 159.50 per USD, entering acute verbal and physical intervention zones.
Commodities: Crude oil prices tumbled by 4.0%, sliding back below the critical $100/barrel handle as energy traders tentatively priced in the state-television peace rumors. Precious metals remained under severe pressure from higher global yield tracking; spot gold slipped further to trade near a fresh 2-month low at $4,456/oz, just above its 200-day moving average ($4,394/oz).
Asia Pacific impact
- South Korean and regional indices explode: South Korea’s benchmark KOSPI spearheaded global equity gains, skyrocketing 3.0% to print a major record high on Wednesday, 27 May. The explosive rally is heavily driven by its twin memory chip giants, Samsung Electronics (+158% YTD) and SK Hynix (+258% YTD), both of which have been vaulted into the exclusive $1-trillion-valuation club due to insatiable AI infrastructure demand.
- Japan eyeing June hike amid slumping currency: Despite massive sovereign bond yield volatility, reports reveal the Bank of Japan is actively eyeing a June interest rate hike. This comes as the Japanese yen’s purchasing power sinks to fresh lows under the weight of expensive energy imports, leaving it tracking as one of the world’s weakest major currencies. Concurrently, SoftBank is pulling in 30 leading Japanese manufacturers to back a major homegrown AI industrial data venture.
- India falters and capital exits accelerate: In stark contrast to its East Asian peers, India’s benchmark equity indices are faltering as foreign institutional investors dump domestic shares at a record-breaking pace. Millions of retail investors are shifting capital out of the country into foreign markets (up 57% y/y) due to a complete lack of AI exposure at home, a rapidly depreciating rupee, and consecutive fuel price hikes stoking structural inflation.
Top 3 events to watch today
- US PCE Core Inflation (Apr) – 8:30 pm SGT (consensus: 3.3% y/y, Mar: 3.2% y/y) Impact: All asset classes
- US Weekly Initial Jobless Claims – 8:30 pm SGT Impact: USD, short-term US Treasuries, US stock indices
- US-Iran peace deal news flows Impact: All asset classes
Chart of the Day – Nikkei 225 at Risk of Minor Setback
Fig. 1: Japan 225 CFD minor trend as of 28 May 2026 (Source: TradingView).
The price actions of the Japan 225 CFD (a proxy of the Nikkei 225 futures) have hit a short-term inflection/resistance level of 66,190/558 on Wednesday, 27 May 2026, after breaching above the upper boundary of a major ascending channel running from the 7 April 2026 low.
In addition, the hourly RSI momentum indicator flashed a prior bearish divergence condition at its overbought level before staging a bearish breakdown below its 50 level.
These observations suggest an impending minor corrective pull-back/setback. Watch the 65,665 key short-term pivotal resistance. A break below 64,620 near-term support (downside trigger level) may expose the next intermediate supports at 63,788/270 and 62,510 (also close to the 20-day moving average).
However, a clearance above 65,665 invalidates the bearish scenario for a continuation of the bullish impulsive upmove sequence to retest the current all-time high area of 66,190/558 before potentially setting sight on the next intermediate resistance at 67,047 (Fibonacci extension).
