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Change at the top: Apple loses status as the most valuable company in the world

Business change at the top

Apple loses status as the world’s most valuable company

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Status: 01:44 a.m

“The Fed had to react to inflation”

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With the interest rate hike, the Fed is trying to achieve a “soft landing”, believes Sam Stovall, chief strategist at CFRA Research. At the moment, however, a recession does not have to be assumed.

The fear of significantly rising interest rates is driving the prices of technology companies down. This has now led to the iPhone manufacturer having to give up its top spot in the list of the most valuable companies in the world – to a group that is benefiting from the current situation.

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Dhe largest oil company in the world, Saudi Aramco, has replaced the technology group Apple as the most valuable company in the world. While Saudi Aramco’s share price has benefited from high oil prices in recent weeks, the iPhone manufacturer’s paper has come under increasing pressure due to rising capital market interest rates, supply bottlenecks and growth concerns. On Wednesday, Apple fell 5 percent to its lowest level since late October last year.

Saudi Aramco’s share price has risen more than 17 percent on its home exchange Tadawul in Riyadh since mid-March. The Apple price, on the other hand, has lost more than 18 percent since the end of March. The prospect of rising interest rates caused investors to sell technology stocks in particular.

Because in the long phase of cheap money, investors had increasingly relied on high-growth tech companies. Now, however, interest rates are likely to rise sharply in view of the high inflation, which could mean that Apple, Amazon, Microsoft & Co. are clearly overvalued.

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The shares of Saudi Aramco, which went public at the end of 2019, had recently reached a record high. The company currently has a market capitalization of $2.43 trillion. In doing so, they left Apple behind for the first time since 2020. The company from Cupertino in California is only worth 2.37 trillion dollars with a loss of a good five percent this Wednesday.

At the beginning of the year, Apple, at around three trillion dollars, was one trillion dollars heavier than the Saudi Arabian oil producer. However, only a small proportion of Aramco shares are freely tradable, and the vast majority are in state hands.

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The US Federal Reserve is likely to raise interest rates by a further 1.5 percentage points this year. That and the prospect of an ongoing war in Ukraine mean that the big tech companies cannot be expected to return to their former strength anytime soon, said Tim Ghriskey, portfolio strategist at Ingalls & Snyder.

He spoke of “panic selling” at a number of technology stocks and other highly rated companies. Investors are likely to reinvest the funds that are freed up in the process, not least in energy stocks whose growth prospects are rosy. “Companies like Saudi Aramco benefit significantly from this situation,” says the expert.

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