GLOBAL MARKETS-Stocks bounce as AI optimism offsets Middle East anxiety

On the macro front, the Institute for ⁠Supply Management on Monday said U.S. manufacturing PMI rose to 54.0 in May from 52.7 the previous month, beating expectations to hit a four-year high, likely driven by firms front-loading orders amid rising prices ⁠and supply concerns linked to the Iran war. Futures on the S&P 500 and Nasdaq 100 were down around 0.1%, pointing to a slightly weaker open after both indexes posted an eighth ​straight gain and fresh record highs on Monday .

​Global stocks rallied on Tuesday, buoyed by fresh AI optimism ‌after ​Anthropic moved towards a U.S. stock market listing, while oil prices and bond yields fell on renewed hopes of a U.S.-Iran deal. Brent crude futures dropped more than 1% to $94 a barrel, paring the previous session's sharp gains, after U.S. President ‌Donald Trump said talks with Iran were ongoing.

His comments came despite a report that Tehran had suspended indirect negotiations with Washington to end hostilities, keeping investors cautious about efforts to end the three-month war and underlining the fragility of an ongoing ceasefire. Europe's STOXX 600 was up nearly 0.8% in morning trading, as a strong forecast from chipmaker ‌STMicroelectronics lifted technology stocks.

AI ENTHUSIASM Anthropic said on Monday it had confidentially filed for a U.S. initial public offering, edging ahead of rival OpenAI in a closely watched race ‌to reach public markets. Google parent Alphabet is also seeking to raise $80 billion in equity to fund the expansion of its AI infrastructure.

"This speaks to the huge sums involved in keeping pace in the AI arms race. It represents a significant shift from a period of bumper free cash flow to going cap in hand to the markets to help fund its expansion," Russ Mould, investment director at ⁠AJ Bell, ​said. On the macro front, the Institute for ⁠Supply Management on Monday said U.S. manufacturing PMI rose to 54.0 in May from 52.7 the previous month, beating expectations to hit a four-year high, likely driven by firms front-loading orders amid rising prices ⁠and supply concerns linked to the Iran war.

Futures on the S&P 500 and Nasdaq 100 were down around 0.1%, pointing to a slightly weaker open after both indexes posted an eighth ​straight gain and fresh record highs on Monday . "That marks the first time in a year the S&P has achieved eight consecutive daily gains. And if ⁠you look at the moves on a weekly basis, a positive gain this week would be the S&P’s 10th consecutive advance, which is something we haven’t seen since 1985," Deutsche Bank strategist Jim Reid said.

In ⁠Taipei, ​Nvidia CEO Jensen Huang said the company has enough supply to support strong growth in central processing units (CPUs) and graphics processing units (GPUs), but acknowledged supply constraints remain a concern. South Korean equities were volatile, with the benchmark KOSPI swinging sharply lower after hitting a record high as bellwethers like Samsung Electronics and SK Hynix seesawed.

In currency markets, ⁠the dollar was broadly steady. The euro , still 1.5% below its level at the start of the war, was last at $1.1643. Data showed euro zone core inflation ⁠rose 2.5% year-on-year in May, above expectations ⁠of 2.4% and April's 2.1%. Money markets price in a quarter-point European Central Bank rate hike this month, with at least one more by year-end.

In bonds, the U.S. 10-year Treasury yield fell 4.4 basis points to 4.43%, while Germany's 10-year Bund ‌yield dropped nearly 6 bps to ‌2.956%. Gold rose 1% to $4,527 an ounce. (Additional reporting by Gregor Stuart Hunter in Singapore. Editing ​by Stephen Coates and Mark Potter)