ORLANDO, Florida, June 2 (Reuters) - World stocks rose

to fresh peaks again on Tuesday as no major change in U.S.-Iran

tensions, together with a general calm across currency and bond

markets, encouraged investors to keep buying. In the U.S., small

caps and non-tech sectors outperformed.

In my column today, I look at the almost stealth-like rally

of small caps this year. While all the headlines have centered

on the hyperscalers and Big Tech behemoths, the big winners from

the AI frenzy have actually been small-cap tech stocks.

If you have more time to read, here are a few articles I

recommend to help you make sense of what happened in markets

today.

1. AI frenzy stokes inflation heat too: Mike Dolan

2. Trump administration to ask U.S. AI firms to

voluntarily submit models for cybersecurity tests

3. How a nudge from Nvidia propelled frugal Micron into

the AI boom and a $1 trillion market cap

4. Euro zone inflation jump reinforces case for June

rate hike

5. China seen tapping deeper into oil stockpiles as

imports hit decade-low

Today's Key Market Moves

* STOCKS: MSCI All Country, MSCI Asia ex-Japan, MSCI

Emerging, S&P 500 all hit record highs. Europe +0.8% on tech

optimism, cyclicals lift UK 0.3%.

* SECTORS/SHARES: Seven S&P 500 sectors rise, four fall.

Utilities +2%, comms services -2.6%. Marvell Technologies +32%,

Hewlett Packard +20%, Super Micro Computer +7%, Alphabet -4%,

Microsoft ( MSFT ) -4%, Dell -7%. Boeing -3%

* FX: USD/JPY nudging 160, traders on Japan intervention

alert. Bitcoin -6% toward $66,000.

* BONDS: 10-year JGB yield -11 bps after strong auction,

biggest fall since April last year. Pace of BOJ taper also in

focus. U.S. yields -3 bps at long end.

* COMMODITIES/METALS: Oil +1%, gold steady.

Today's Talking Points

* Alphabet scoop

Google's parent company Alphabet stunned investors late

Monday, announcing it will raise $80 billion in equity

financing, with $10 billion coming from Berkshire Hathaway. In

many ways it makes sense - debt is getting pricier, there's a

huge AI capex bill to fund, and $80 billion is a fraction of

$4.5 trillion market cap. So why not?

The concern is not so much the amounts involved, but the

direction of travel. At the end of March, Google had $126

billion cash on hand, but its AI capex spend this year will be

almost $200 billion. It has already issued ​more than $85

billion in debt ​over the last year, now this equity capital

raise.

* JOLT from the blue

U.S. "JOLTS" data on Tuesday showed that job openings in

April rose to the highest in two years. The increase was the

fastest in five years. There is clearly demand for workers, and

so far at least, very little evidence that AI is destroying

jobs. But is the labor market as tight as this suggests?

Perhaps not. Some 90% of the openings were concentrated in

one sector, professional and business services. The rate of

hiring, layoffs and quits fell too, a sign of a stagnating

rather than buoyant market. As ever, something for everyone in

the numbers, as eyes turn to May's payrolls report on Friday.

* ECB June hike baked in

Euro zone inflation is above 3% for the first time since

September 2023, figures on Tuesday showed, virtually sealing the

deal on a 25-basis-point rate hike from the ECB next week.

Traders are leaning towards a further 50 bps of tightening by

the end of the year.

Assuming the ECB does move next week, it will join the G10

central banks of Australia and Norway in raising rates, and a

growing clutch of authorities in emerging economies. The Bank of

Japan is also expected to tighten next week. How long before

markets are fully pricing in a rate hike from the Warsh Fed?

What could move markets tomorrow?

* Developments in the Middle East

* PMIs for U.S., China, Japan, euro zone, UK, and others

(May)

* Reserve Bank of New Zealand Chief Economist Paul Conway

speaks

* Australia GDP (Q1)

* Bank of Japan Governor Kazuo Ueda speaks

* European Central Bank officials scheduled to speak include

board members Frank Elderson and Piero Cipollone

* U.S. ADP private sector employment (May)

* U.S. services ISM (May)

* U.S. factory orders (April)

* U.S. Federal Reserve officials scheduled to speak include

Governor Michael Barr and Dallas Fed President Lorie Logan

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