Over in New York, executives from UK chip designer Arm have just rung the Nasdaq opening bell, to mark its stock market flotation.
Cambridge-based Arm, owned by Japanese giant Softbank, is joining the US stock market with a valuation of around $52.3bn.
Last night it priced its shares at the top of its expected range, $51 each, having seen strong interest from investors.
This makes Arm’s float the biggest IPO of 2023 so far – in a year when flotations have been relatively rare, due to market volatility.
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, says all eyes in the equities world are on Arm today as it goes public, adding:
The company set its IPO price to $51 a share. It’s at the top end of the proposed price range, but still lower than the valuation of $64bn when Softbank bought out a stake from Vision Fund.
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A billboard at the Nasdaq stock market is showing information about Arm Holdings’ initial public offering today:
Newsflash: The UK’s blue-chip stock index has just posted its best day of the year so far.
The FTSE 100 index has closed 147 points higher at 7673 points, a gain of 1.95%.
That’s its biggest percentage jump since last November, and takes the Footsie to its highest closing level since the start of August.
The rally was led by mining companies such as Anglo American (+7.7%), Rio Tinto (+4.7%) and Glencore (+4.3%).
Shares soared today after China’s central bank cut the amount of cash that Chinese banks must hold as reserves, in an attempt to stimulate lending and support economic growth.
Investors were also cheered by hopes that the European Central Bank may have finished raising eurozone interest rates, following today’s hike.
Arm’s flotation (once its shares actually start trading…) will set the tone on Wall Street, points out New York Times writer Erin Griffith:
Arm shares are on track to jump sharply, as they make their debut on the tech-focused Nasdaq index today.
Reuters reports that Arm Holdings shares are currently indicated to open at $58.01.
That would be a 13% increase on the $51 per share which investors bought stock in its IPO.
The ECB is walking on “a very treacherous path right now”, warns Clémence Dachicourt, senior portfolio manager at Morningstar Investment Consulting France.
Economic growth in the Euro-zone has come to a halt, expectations for future growth prospects are bleak, yet core inflation remains stubbornly high and way significantly above the central bank’s 2% target.
While this draws the effectiveness of the ECB’s rate hikes into question, the central bank will certainly want to avoid errors of the past when it decided to raise interest rates in July 2008, at the same time as the global economy was heading into one of the biggest financial crises, or again in 2011 just before the Eurozone crisis.
Going forward, the European Central Bank may decide to be more considerate about underlying economic growth and pause interest rate hikes to avoid precipitating the zone into a deep recession.”
The euro continues to lose ground against the US dollar, now down three-quarters of a cent at $1.066.
The European Central Bank is raising interest rates into a recession, fears Felix Feather, economic analyst at investment company abrdn.
Feather explains:
The decision comes despite very weak activity data in recent months. It is our belief that the ECB are continuing to hike rates into a recession that is probably already underway. The latest hike could make this downturn deeper and the recovery slower. Despite losing out in the rate decision, it appears the bank’s doves were able to secure a dovish framing in which the hike was delivered. Indeed, it appears the bank now considers its hiking cycle over (barring any big surprises).
We think this will indeed be the final rate hike of this cycle. However, we do expect cuts in 2024 when the effects of the upcoming recession on the labour market and consumer prices become apparent.”
Today’s ECB interest rate rise is a “dovish hike”, declares Mohit Kumar, chief European economist at Jefferies.
Kumar explains:
The statement reads like a one and done hike from the ECB.
Key statement change suggests that Governing Council considers that the key ECB interest rates have reached levels that, maintained for a sufficiently long duration, will make a substantial contribution to the timely return of inflation to the target.
Growth forecasts were lowered and more importantly inflation forecasts were lowered for 2024 and 2025.
But, Jeffferies does not predict interest rate cuts anytime soon, indeed not until the second half of next year.
Kumar adds:
We believe rate cuts will be a H2 24 story.
Over in New York, executives from UK chip designer Arm have just rung the Nasdaq opening bell, to mark its stock market flotation.
Cambridge-based Arm, owned by Japanese giant Softbank, is joining the US stock market with a valuation of around $52.3bn.
Last night it priced its shares at the top of its expected range, $51 each, having seen strong interest from investors.
This makes Arm’s float the biggest IPO of 2023 so far – in a year when flotations have been relatively rare, due to market volatility.
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, says all eyes in the equities world are on Arm today as it goes public, adding:
The company set its IPO price to $51 a share. It’s at the top end of the proposed price range, but still lower than the valuation of $64bn when Softbank bought out a stake from Vision Fund.
Today’s eurozone interest rate rise is the tenth consecutive time the ECB has tightened monetary policy. points out Victoria Scholar, head of investment at interactive investor.
She adds:
Meanwhile the central bank issued some gloomy forecasts on the economy, cutting its 2023-24 growth outlook and raising its inflation guidance for next year, suggesting price pressures will take longer to shake off than previously anticipated. Inflation is expected to be at 5.6% in 2023, 3.2% in 2024 and finally around target at 2.1% by 2025.
The ECB began tightening later than the Fed and the Bank of England, landing it behind the curve, which forced the central bank into acting more swiftly. But that aggressive policy has had consequences for the euro zone economy with Germany potentially heading into a recession. With sluggish growth and increased labour market slack, the more dovish ECB rate setters believed a pause would have been more appropriate, but the governing council decided to prioritise tackling inflation, even if it comes at a cost to the economy. Looking ahead, the recent rally in oil prices is likely to muddy the picture for the ECB by standing in the way of the eurozone’s disinflationary path.
Government bond yields in the euro zone fell despite another hike from the ECB. Price action in the bond market reflects the ECB’s signalling that it is probably at the end of this tightening cycle, even though inflation for August hit 5.3%, still sharply above its 2% target.
ECB President Lagarde said she expect inflation to fall in the coming months. And no doubt the governing council is also worried about a significant slowdown in the euro zone economy, given the weakness in recent indicators.”
https://news.google.com/rss/articles/CBMiogFodHRwczovL3d3dy50aGVndWFyZGlhbi5jb20vYnVzaW5lc3MvbGl2ZS8yMDIzL3NlcC8xNC9qb2huLWxld2lzLWRlbGF5cy10dXJuYXJvdW5kLXBsYW4tbG9zc2VzLWFybS1ob2xkaW5ncy1pcG8tcmV0YWlsLWVjYi1wb3VuZC1ldXJvLWludGVyZXN0LXJhdGVzLWJ1c2luZXNzLWxpdmXSAaIBaHR0cHM6Ly9hbXAudGhlZ3VhcmRpYW4uY29tL2J1c2luZXNzL2xpdmUvMjAyMy9zZXAvMTQvam9obi1sZXdpcy1kZWxheXMtdHVybmFyb3VuZC1wbGFuLWxvc3Nlcy1hcm0taG9sZGluZ3MtaXBvLXJldGFpbC1lY2ItcG91bmQtZXVyby1pbnRlcmVzdC1yYXRlcy1idXNpbmVzcy1saXZl?oc=5
2023-09-14 14:47:02Z
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