IPO market hit by market volatility, Bitcoin losses continue

Market Reports

by Tim McGowen

US equities were lower in Thursday trading, though finished off worst levels.

The Dow Jones Industrial Average shed 253.88 points, or 0.8 per cent, to 30,775.43. The S&P 500 slid nearly 0.9 per cent to 3,785.38, and the Nasdaq Composite pulled back by 1.3 per cent to 11,028.74.

Thursday marked the final day of the second quarter. The Dow and S&P 500 posted their worst quarter since the first quarter of 2020 when Covid lockdowns sent stocks tumbling. Only the energy sector rose year to date.

The tech-heavy Nasdaq Composite is down 22.4 per cent for the second quarter, its worst stretch since 2008. The tech-heavy Nasdaq index is now down more than 31 per cent below its November all-time high.With some of the largest technology companies having registered sizable declines this year, with Netflix down 71 per cent. Apple and Alphabet have lost roughly 23 per cent and 24.8 per cent, respectively, while Facebook-parent Meta has slid 52 per cent.

US stocks are headed for the worst first half since 1970. Interestingly, Chinese equities are on course for the biggest monthly gain in almost two years as investors bet the worst of a lockdown-induced economic shock and extended tech sector crackdown in the country has passed. The CSI 300 index of Shanghai- and Shenzhen-listed stocks has climbed more than 8 per cent in June.

Across the sectors overnight - the worst performing sector today was energy - as WTI crude settled down 3.7 per cent amid broader commodity weakness.

OPEC is likely to restore oil output to pre pandemic levels. The cartel is finished up a two-day meeting today where it is expected to pledge to boost oil production by nearly 650,000 barrels a day. That level would be in line with what its members were producing before big cuts in early 2020. The decision comes ahead of a planned trip by President Biden to Saudi Arabia next month.

About the only thing that rose in the first half was commodities prices. Oil prices surged above $100 a barrel, and U.S. gas prices hit records after the Russia-Ukraine war upended imports from Russia, the world’s third-largest oil producer.

In the IPO market rising interest rates, increased regulatory scrutiny and the stock market’s worst first half in 50 years are squeezing the I.P.O. market in a way that hasn’t happened since the financial crisis. Six months into 2022, initial public offerings are at their slowest pace since 2009, according to data from Dealogic.

Proceeds from I.P.O.s have plunged 94 percent. First-time stock sales in the US have only raised $4.8 billion so far this year, down from $83 billion a year earlier. Many I.P.O.s that have made it to market have been disappointments: Shares of newly public companies are down 46 percent this year, according to Renaissance Capital’s I.P.O. index.

Even high-profile companies are having to call off deals. Instacart, Discord and Reddit are among the well-known companies that bankers say are waiting to IPO.

Overnight Treasuries rallied with curve steepening, pushing 2Y yields below 3 per cent.

Bitcoin futures were down 6.8 per cent, sitting just below $19K. It has been a painful eight months for digital assets. The total market capitalisation of the space has plunged to $850 billion from heights of nearly $3 trillion, with much of the most severe declines coming in recent weeks and months.

Bitcoin is on track to close out its worst quarter since late 2011, a year in which it breached the $1 mark for the first time, while Ether is sliding into the end of its worst quarter on record.

Currencies

US Dollar was weaker vs the major crosses

One Australian Dollar at 7:10 AM has strengthened since yesterday, buying 69.04 US cents (Thu: 68.81 US cents), 56.76 Pence Sterling, 93.72 Yen and 65.84 Euro cents.

Commodities

Iron ore has lost 2.5 per cent to US$120.10. Its futures point to a 5.4 per cent fall.

Gold has lost $10.20 or 0.6 per cent to US$1807 an ounce. Silver was down $0.39 or 1.9 per cent to US$20.35 an ounce.

Oil has fallen $4.02 or 3.7 per cent to US$105.76 a barrel.

The SPI futures are pointing to a 0.2 per cent gain.

Figures around the globe

Across the Atlantic, European markets closed lower. Paris fell 1.8 per cent, Frankfurt lost 1.7 per cent and London’s FTSE dropped almost 2 per cent.

Asian markets closed mixed, Tokyo’s Nikkei fell 1.5 per cent, Hong Kong’s Hang Seng lost 0.6 per cent and China’s Shanghai Composite added 1.1 per cent.

Yesterday, the Australian sharemarket dropped almost 2 per cent to 6568.

Ex-dividend

There are three companies set to trade without the right to its dividend.

Magellan Global Fund (ASX:MGF) is paying 3.66 cents unfranked
NB Global Corporate Income Trust (ASX:NBI) is paying 1.03 cents unfranked
Pengana Private (ASX:PE1) is paying 3.243 cents unfranked

Dividend-pay

There are five companies set to pay eligible shareholders today

Aristocrat Leisure (ASX:ALL)
ANZ Banking Group (ASX:ANZ)
CSR (ASX:CSR)
Pendal Group (ASX:PDL)
Virtus Health (ASX:VRT)

IPO

There are two companies set to make its debut on the ASX today. Keep an eye out for MOVE Logistics Group (ASX:MOV) and Oceana Lithium (ASX:OCN)

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