Global markets broadly rise on AI chip demand despite Wall Street's retreat on inflation data

Global equities broadly advanced on continued demand for AI semiconductors, even as Wall Street pulled back after inflation data came in hotter than expected. The divergence reflects a rotation within risk assets: strong AI-linked earnings expectations are supporting valuations in chipmakers and their suppliers, while the inflation reading is lifting Treasury yields and compressing the multiples that the broader S&P 500 can sustain. The S&P 500 is most exposed because its index weighting toward large-cap technology makes it sensitive to both the AI earnings narrative and any shift in the rate path, while rate-sensitive sectors such as utilities and real estate face more direct pressure from higher yields. The next catalyst traders will watch is the upcoming Federal Reserve policy decision and the accompanying updated projections, which will indicate whether the CPI surprise changes the timing of expected rate cuts.

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