US markets buoyed by inflation data, Pepsi loses fizz and Apple opens up tap-and-go in Eurozone

“Investors seem to have been on the rate cut rollercoaster for an unhealthy amount of time, lurching between the highs of expectation and the lows of reassessing. But the latest set of US inflation figures suggest the first rate cut in the US could finally be nigh” says AJ Bell Head of Financial Analysis Danni Hewson.

“Expectation of a September cut by the Fed jumped after the cooler than anticipated CPI reading, with traders pricing in a 90% chance of a cut – a sentiment that lifted US markets. With key factors like shelter costs finally beginning to cool, hope has been rekindled that there could be room for two, possibly even three downward manoeuvres by the end of the year.

“But there are no guarantees, something that’s been made abundantly clear on this side of the Atlantic. A sprinkle of good news about UK economic growth has muddied the waters for Bank of England policymakers. Just a few days ago it seemed likely MPC members would jump before their US counterparts, but now it could be that UK investors will have to keep their seats a little longer.”

PepsiCo

“When inflation spiked it was a no-brainer for many businesses to push up their prices in order to protect margins. The gamble for the likes of PepsiCo was to see how far they could push their consumer and test loyalty to the brand.

“PepsiCo may have pushed a bit too hard with the result that it missed quarterly revenue expectations for only the second time since 2017. Volumes have shrunk and winning back those shoppers who have made the switch to cheaper own label versions of products is going to be tough.

“PepsiCo has some difficult choices to make. It can sacrifice margins by slashing prices, spend big on marketing in the hopes that shoppers will remember the tastes they used to love, or develop new products that tap into new trends and customers. It’s clear those at the top are hyper aware of the job they now face.”

Apple

“Apple shares fell in early trading following the news that it would allow competitors to access its mobile wallet for free as it sought to avoid antitrust fines from the European Union.

“The company has committed to allowing rivals access to its tap-and-go facility for a period of ten years throughout the European Economic Area. It gives developers scope in areas like payments, car keys and even concert tickets.

“The EU has been flexing its regulatory muscles of late and this isn’t the only area of disagreement it has with Apple, plus the decision will be scrutinised by other regulators who have grown increasingly concerned with big tech’s global dominance.”

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