Markets Hit Record Highs Amid AI Optimism, IPO Wave

Hello, this is Leonie Kidd writing to you from London. Welcome to today's edition of the Daily Open newsletter.

The animal spirit optimism around AI and the unprecedented wave of IPOs for giants like OpenAI, Anthropic and SpaceX is keeping major markets at record levels.

Goldman Sachs CEO David Solomon says "exuberance can go on for big periods of time," but he also cautioned that greed can "turn into fear very quickly."

It's a complex trading picture for investors to navigate.

Another day, another set of record highs. The S&P 500 has crossed 7,600 for the first time ever, closing at a fresh all-time high alongside the Dow and Nasdaq , which also hit new peaks. Japan's Nikkei 225 also surged to new levels on Wednesday, as major stock markets continue to look past geopolitical concerns and focus on the bullish sentiment around AI.

But there are some warning signals. The last time the S&P rose this rapidly — outside of a recession period — was before the 1987 stock market crash. Deutsche Bank cautioned that "the speed of the rally is now bucking all recent precedents for an economy that isn't emerging from recession."

Speaking to CNBC on Tuesday, Goldman Sachs CEO David Solomon said "we are definitely in a moment where there's more greed than there is fear," as markets anticipate a fundraising wave for a slew of massive AI equity offerings.

This is playing out in the crypto markets, with Bitcoin falling to levels not seen since February, with some analysts saying the alternative asset is losing out to private markets and IPOs as investors look to free up liquidity.

Caution can be found in the oil markets. Brent and WTI are higher in early trading amid the stalemate in talks between the U.S. and Iran. U.S. Central Command announced another round of defensive strikes against Iran, while the White House said talks with Tehran were ongoing, despite state-supported Iranian news services reporting that no messages had been exchanged for several days.

Later today, CNBC will speak exclusively to Israel's President Benjamin Netanyahu live from Israel at 10am eastern time. You can watch that interview here.

Trade tensions are returning, after the Office of the U.S. Trade Representative proposed an additional round of tariffs of up to 12.5% on imports from 60 different economies. The USTR cited a failure to ban goods made with forced labour for the action. Nations impacted include the European Union, China and Japan.

— Leonie Kidd