FTSE 100 holds steady as global markets surge on artificial intelligence optimism

​​​FTSE 100 outperforms European peers in cautious session

​The FTSE 100 managed a solid 0.3% gain, outperforming broader European markets that remained largely flat ahead of key economic data. Energy stocks provided crucial support as oil prices held steady, while multinational companies benefited from modest US dollar strength.

​Defence contractor BAE Systems rose 3.1% after announcing plans to accelerate shipbuilding efforts, targeting one warship per year within two years. The stock has gained an impressive 65% this year as geopolitical tensions boost global defence spending.

​Consumer-focused companies delivered mixed results, with Fevertree Drinks surging 9% on strong earnings and an extended share buyback programme. The tonic maker's US partnership with Molson Coors continues to deliver impressive growth momentum.

​UK markets continue to lag their international peers this year, though their defensive characteristics may prove valuable if global growth concerns resurface. The British pound's slight weakness against the dollar provided additional support for internationally-focused companies.

​US markets hit record highs on technology rally

​Across the Atlantic, US markets delivered another stellar session with both the S&P 500 and Nasdaq Composite reaching fresh all-time highs. The S&P 500 gained 0.3% while the Nasdaq edged just 0.03% higher in a tech-heavy session.

​The Dow Jones Industrial Average bucked the trend, slipping 0.5% as traditional industrial and financial stocks lagged behind the technology surge. This divergence highlights the market's current obsession with artificial intelligence developments.

​Record highs in major US indices demonstrate remarkable resilience despite ongoing economic uncertainties. The combination of strong corporate earnings and optimism around artificial intelligence (AI) developments continues to drive investor sentiment globally.

​Market breadth remained relatively narrow, with technology stocks carrying much of the load. This concentration risk remains a key concern for analysts, though momentum continues to favour growth-oriented sectors.

​Oracle's spectacular surge fuels global artificial intelligence boom

​Oracle delivered one of the most spectacular single-day gains in recent memory, surging 36% in its biggest one-day increase since 1992. The database giant's rally pushed its market capitalisation to $922 billion, cementing its position among tech heavyweights.

​The company's strong results and optimistic AI guidance sparked a broader rally across AI-related stocks. Chipmakers and power suppliers, essential components of AI infrastructure, rode the wave of enthusiasm higher throughout the session.

​Oracle's performance demonstrates how individual company results can reshape entire market sectors. The stock's massive move reflects investor appetite for companies positioned to benefit from the ongoing AI revolution.

​This surge highlights the premium investors are willing to pay for exposure to artificial intelligence growth stories. Companies with clear AI strategies continue to outperform traditional technology peers by significant margins.

​Key events today: US CPI data and ECB decision loom large

​Markets are positioning cautiously ahead of two critical events later today that could reshape trading sentiment. US consumer price index (CPI) data will provide fresh insight into inflation trends, while the European Central Bank (ECB) meets to decide on interest rates.

​The CPI reading will be closely scrutinised following yesterday's softer producer price data. If consumer prices also show signs of cooling, it could reinforce expectations for aggressive Federal Reserve (Fed) rate cuts next week.

​The ECB is widely expected to leave rates unchanged for a second consecutive meeting, but commentary around future policy direction will be crucial. European markets have underperformed US peers partly due to concerns about economic growth momentum.

​These events explain why trading volumes remain subdued despite record highs in US markets. Investors are adopting a wait-and-see approach before making significant positioning changes ahead of the weekend.

​Producer prices fall supports Federal Reserve rate cut expectations

​August producer price index (PPI) data came in softer than expected, reinforcing market expectations for a Fed interest rate cut next week. The unexpected decline in wholesale prices suggests inflationary pressures may be easing more quickly than anticipated.

​Softer PPI readings often translate into lower consumer prices with a lag, giving the Fed more confidence to ease monetary policy. Markets are now pricing in a higher probability of rate cuts in the coming months.

​Lower producer prices benefit corporate margins, particularly for companies that cannot easily pass increased costs onto consumers. This development supports the bull case for equities across multiple sectors.

​The data strengthens arguments for a more dovish Fed policy stance, which historically supports higher equity valuations. Trading platforms are seeing increased activity as investors position for potential rate cuts.

​Asian markets reach new peaks on artificial intelligence momentum

​Asian equity markets rode the wave of AI optimism overnight, with Japanese, Taiwanese and South Korean indices all hitting record highs. The technology-heavy nature of these markets made them natural beneficiaries of Oracle's surge.

​Japanese stocks benefited from both AI enthusiasm and expectations of continued accommodative monetary policy from the Bank of Japan (BoJ). The Japanese yen's weakness continues to support export-oriented companies in global markets.

​Taiwan's benchmark index reached new peaks as semiconductor companies gained on AI infrastructure demand. The island's crucial role in global chip production makes it a key beneficiary of artificial intelligence investment themes.

​South Korean markets also participated in the rally, with technology conglomerates leading gains. The global nature of the AI theme demonstrates how interconnected modern markets have become across time zones.