Markets fired up by cooler inflation while Apple reclaims crown as world’s most valuable listed company

“Lighter than expected US inflation figures have fired up the market and got investors rubbing their hands, predicting the rate cut gravy train will start its journey soon,” says Dan Coatsworth, Investment Analyst at AJ Bell.

“Equities bounced on the news, but we’ve been here plenty of times before. While inflation is slowing, it remains well above the 2% target and so one shouldn’t expect a rate cut at the Fed’s meeting later today.

“That doesn’t seem to bother the market given how the main equity indices performed. Investors have simply concluded that softer inflation means we’re on the right path towards cuts.

“It has also helped to have a new hook on which to hang the AI hype. The combination of clarity on how Apple intends to embrace AI and Oracle reporting big demand for AI-related activities has given investors something new to talk about and two different ways to play the theme instead of relying on chip giant Nvidia.

“Apple overtaking Microsoft to reclaim its position as the world’s most valuable listed company also puts it under the spotlight. The iPhone maker has been the laggard among the mega-cap tech names this year due to concerns about sales of its core product in China and being left behind in the AI race. The former issue has still to be resolved, but progress with AI means it is now seen as a catch-up candidate, hence the rally in the share price.

“Today’s market action was nearly a full house for investors seeking core catalysts to fire up equities. Weaker inflation, interest cut hopes, AI news and activist investor action with Nelson Peltz targeting Rentokil. The only thing missing was new takeover activity. It might only be a matter of time as big M&A deals look possible once interest rates start to fall.”

These articles are for information purposes only and are not a personal recommendation or advice.