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• AI software names weaken after Anthropic announcement
• Eurozone inflation sharply lower
• China and US in battle for global commodities

The FTSE 100 is enjoying a strong start to the trading day, pushing into fresh record highs despite tech concerns that took the Nasdaq sharply lower in the US session yesterday. Nonetheless, the jitters seen around tech software providers has spilled over into select names in the UK, with London Stock Exchange and Relx both heavily down as markets weigh up the implications for companies selling expensive software solutions in a world of AI abundance. As investors are constantly seeking to analyse the potential winners and losers from the AI revolution, yesterday’s release of Anthropic’s AI automation tool for legal work highlights how we are likely to see disruption for entire industries in the years ahead. This undoubtedly will be disinflationary in nature, taking services that cost thousands and providing it for a fraction of the cost. However, the implications for equity markets are difficult to gauge as for each AI winner there will be a handful of companies whose business models are entirely undermined. 

The latest eurozone inflation gauge saw a sharp decline to 1.7%, marking the joint lowest rate since 2021. The weakness seen for the euro highlights the heightened prospect of easing from the ECB in response, although markets still believe that to be an outside chance. Nonetheless, with this latest reading does highlight the wider disinflation trend that appears to be taking hold, providing the basis for more expansionary policies from governments and central banks alike.

While investors in the AI space wake up to the notion that perhaps the winners will be on the hardware side rather than in software, China’s plans to ramp Copper stockpiles serves to highlight the battle that will take shape over the coming years. The recent volatility in the commodity space came after a period of exuberance for strategic metals such as silver and copper. However, with both the US and China explicitly stockpiling these commodities, the supply-demand dynamic only looks to tighten further to the benefit of prices. The $9 billion deal that has seen a US-backed consortium buy 40% of Glencore’s Congo copper and cobalt operations is yet another signal that global supply will be sucked up by the top economies of the world as they seek to win the AI race. Notably, Trump’s Project Vault looks remarkably likes something the Chinese would do, with the US waking up to the benefits of a more centralised strategy in relation to key industries and resources. 

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