Last Friday, US equity indices ended the session higher. The S&P 500 rose by 0.19%, the Nasdaq 100 ticked up by 0.10%, and the Dow Jones Industrial Average gained 0.19%.

Oil prices resumed their advance after US President Donald Trump expressed doubts about compliance with the ceasefire agreement with Iran, reinforcing concerns about a prolonged closure of the Strait of Hormuz. Asian markets showed sharp volatility after a senior South Korean politician suggested paying citizens dividends funded by AI-related corporate profits.

That development pressured fixed income: the 10-year US Treasury yield rose by one basis point to 4.42%, and the US dollar strengthened against all G10 currencies as investors sought safe-haven liquidity.

As noted above, the biggest volatility in Asia came from South Korea. The KOSPI plunged by 3.1% after Kim Young-beom, head of the presidential office, said that the country should pay citizens dividends financed by taxes on AI profits. The MSCI Asia Pacific index fell by 0.4% on the news. Futures point to a roughly 0.7% decline in the early European trade. Futures on major Wall Street indices also slipped after core benchmarks closed at record highs on Monday.

Meanwhile, the S&P 500 completed a six-week winning streak — one of the longest in history — rising by more than 16% over that period, marking the strongest run since the 2008 global financial crisis. New flare-ups in Middle East tensions could threaten further gains. Although robust corporate profits in the US and a renewed pickup in the AI sector have prompted another round of Wall Street year-end upgrades, market attention will pivot this week to US inflation data. Those figures will show how much price pressure from the conflict has fed into the economy and could revise expectations for the Federal Reserve's policy path.

So far, the Middle East pressure has not materially dented the US growth impulse, but a prolonged escalation could change that. The ceasefire between the US and Iran is fragile: yesterday, Trump said that the agreement was at risk after he rejected Tehran's latest peace proposal, calling Iran's response "a piece of garbage" and saying he had not even finished reading it. He did not clarify whether the US would resume military strikes as previously threatened if the Iranian leadership did not accept his terms.

As for the technical S&P 500 analysis, the immediate task for buyers is to overcome the resistance level of $7,404. That would confirm upside momentum and open the path to $7,427. Holding above $7,451 would further strengthen bulls' positions. On the downside, buyers need to defend the $7,381 area. A break below that level would likely push the index back to $7,361 and open the way toward $7,339.