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LIVE MARKETS-U.S. IPO mania, SPAC attack rolls on

Tue 26th January, 2021 5:45pm
* Major U.S. stock indexes near flat * Real estate leads sector gains; energy biggest decliner * STOXX 600 index rises 0.6% * Dollar, gold, crude down; US 10-yr Treasury yield ~1.04% Jan 26 - Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at U.S. IPO MANIA, SPAC ATTACK ROLLS ON (1230 EST/1730 GMT) The traditional IPO market has certainly picked up where it left off last year as 16 companies have already debuted in January. At this point last year, just four IPOs had priced and only nine deals got done in the first month of 2020. Investors continue to be handsomely rewarded as the average 2021 IPO has returned about 50% so far. The Renaissance IPO ETF IPO.P , which tracks recent IPOs, has risen about 9% year-to-date, while the S&P 500 .SPX is up 2.7% and the Nasdaq has gained 6%. On the SPAC (special purpose acquisition company) front, issuance is on a breakneck pace. Through Friday, nearly 70 SPACs have raised more than $15 billion of capital year-to-date, following some 250 deals in all of 2020 that raised roughly $82 billion. And markets willing, there's still plenty of new issues on the way. Below is a list of near-term IPOs (>$50 mln), by expected debut date: Jan 27: Shoals Technologies SHLS.O (solar equip maker) (~$1.6 bln) Jan 28: Ortho Clinical Diagnostics OCDX.O (diagnostics equip) (~$1.6 bln) Qualtrics International XM.O (software) (~$1.3 bln) Zim Integrated Shipping Services ZIM.N (Israel, shipping) (~$300 mln) Vinci Partners Investments VINP.O (Brazil, asset management) (~$250 mln) Jan 29: Home Point Capital HMPT.O (mortgages) (~$260 mln) Southeastern Grocers SEGR.N (supermarkets) (~$140 mln) Trinity Capital IPO-TRIV.O (specialty finance/BDC) (~$115m) Feb 3: ON24 Inc ONTF.N (interactive webinars) (~$430 mln) Telus International TINT.N (business process outsourcing) (~$830 mln) Feb 4: Atotech ATC.N (UK, metal finishing/chemicals technology) (~$750 mln) (Lance Tupper) ***** FRENCH RETAIL GOES FROM BULLS TO BEARS French mom and pop investors are known to be quite conservatives and typically favor savings accounts or real estate over the stock market, let alone challenging Wall Street hedge funds in dramatic short squeeze battles like currently on GameStop. The last year though has seen quite a big flow of retail investors making their debut on the Paris bourse, according to data just published by the French market authority AMF. About 1.4 million retail investors bought or sold shares in 2020 and among them, 411,000 had never bought shares or had been inactive since January 2018. The AMF had already reported a burst of retail investors jumping into the market to buy the dip during the COVID-19 March market crash. (See: French mom-and-pop investors in pandemic buying frenzy*:nL5N2CG41U) The fresh data shows the balance of buyers versus sellers swell in favour of the bulls until the last quarter of 2020. Retail sellers then just slightly outnumbered buyers during the last three months of 2020. You can see the massive flow entry of buyers in their chart (in French) below. The huge flow of buyers in Q4 2019 was a one off due to the IPO/privatisation of the French lottery operator Française des Jeux, which proved quite popular among the French public. (Julien Ponthus) ***** CONSUMER CONFIDENCE WARMS UP, HOUSING MARKET STILL ON FIRE (1110 EST/1610 GMT) Data released on Tuesday showed consumer moods brightening in the new year, as a new U.S. president and ongoing vaccine deployment stoked recovery hopes. Consumer confidence USCONC=ECI has brightened this month, rising 2.2 points to a reading of 89.3, according to the Conference Board.*:nAQN03PW1L The number came in slightly above the 89 consensus. A dip in the "present situation" subcomponent (to 84.4 from 87.2) was more than offset by a 5.5-point jump in "expectations" (to 92.5 from an even 87), inverting their relationship from December. Still, the overall mood remains relatively somber. "The index remains well below the pre-pandemic reading of 108.1 in February 2020," writes Kathy Bostjancic, chief U.S. financial economist at Oxford Economics (OE). "Consumers' view of current conditions is the worst since May." But should the "expectations" score remains higher than the "present situation" subindex for an extended period, it could presage sustained economic growth and bull markets, as has been the case historically: Meanwhile, the housing market, in contrast with the broader economy, continues to heat up. In a separate report, home prices jumped more than expected in November, and are up 9.1% year-on-year, according to Case-Shiller's 20-city composite USSHPQ=ECI , the fastest annual increase since May 2014. Analysts expected an 8.6% annual increase on top of the prior month's 8% gain. Home prices have been driven skyward as heightened demand, driven by a flight to the suburbs in search of lower density population and home office space, has stretched inventories to all-time lows. While the imbalance is a near-term boon for homebuilders, the resulting price surge has put home ownership beyond the grasp of some would-be buyers. "The surge in home prices is taking a toll on affordability and pricing buyers out of the market," says Nancy Vanden Houten, lead economist at OE. "The inventory of existing homes for sale has been contracting at an average rate of 21% y/y since June, leaving the supply of homes for sale at a record low in December." Phoenix, Seattle and San Diego saw the biggest home price surge, gaining 13.8%, 12.7% and 12.3%, respectively. Las Vegas brought up the rear, gaining a still-respectable 6.8% year-on-year. The data, along with upbeat earnings, managed to coax some buyers into the market by late morning. All three major U.S. stock indexes were trading near flat in late-morning New York trade. (Stephen Culp) ***** S&P 500 TRADES UP SLIGHTLY, HITS RECORD HIGH EARLY (1030 EST/1530 GMT) The S&P 500 .SPX was trading up slightly after hitting another record high early on Tuesday, with support from upbeat earnings. 3M & Co MMM.N and Johnson & Johnson JNJ.N gave the Dow its biggest boost. Their shares gained following their results, with Johnson & Johnson's stock hitting a record high. However, rising valuations have left investors fearful over a stock bubble and a possible pullback.*:nL1N2K01NM The S&P 500 is trading at 22 times the 12-month forward earnings, well above its long-term average of about 15. (Caroline Valetkevitch) ***** EURO ZONE: THE CRISIS DIES, THE 'PERIPHERY' SURVIVES (0912 EST/1412 GMT) A decade ago, the euro zone's sovereign debt crisis was in full swing and it was not clear whether the bloc would survive it. Yields for 10-year government bonds were through the roof for what had become and would remain, in financial jargon, the 'periphery' of Europe's monetary union. In 2011, Ireland and Portugal went as high as 14%, Greece was over 30% while Italy and Spain were in the region of 7%. Forward back to 2021 and with that in mind, Italian yields climbing to 0.7% during the latest political crisis ain't that dramatic to say the least. What a difference a decade makes eh? The ECB's COVID-19 massive stimulus has flattened all yields and the situation has little to do with 10 years ago. But looking at how Portuguese and Spanish bond yields have tracked Italy through the political crisis actually suggests the concept of the periphery is alive and kicking; even if Ireland appears to have quietly left its ranks. Old habits die hard. (Abhinav Ramnarayan and Julien Ponthus) ***** DOW INDUSTRIALS: A SETUP FOR FAILURE? (0900 EST/1400 GMT) Since reaching resistance in early January, the Dow Jones Industrial Average .DJI has struggled. Meanwhile, volatility and trend/momentum studies have reached levels, that, over the past 3 years, have preceded some significant declines: The Dow has been battling a weekly log-scale resistance line from its early-2018 top, which now resides around 31,075. In the wake of one modest weekly close above this line on January 8, upside has stalled. Indeed, the blue-chip average is on track for a loss of about 0.4% over the past 3 weeks. With this, volatility close-to-close has contracted to a reading of 6.13. Over the past 3 years, sell offs of varying degree have been preceded by sub-13.00 readings. Additionally, the MACD is rolling over just under its early 2018 high. Of note, over the past 3 years, Dow tops formed amid MACD divergence. A Dow break of its rising 10-week moving average (WMA), now around 30,500, coupled with rising volatility, could lead to increasing downside pressure. The rising 40-WMA, which contained late-October weakness, is now around 27,775. (Terence Gabriel) ***** FOR TUESDAY'S LIVE MARKETS' POSTS PRIOR TO 0900 EST/1400 GMT - CLICK HERE:*:nL1N2K1167 <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Dow01262021 sqdf Early US markets snapshot Consumer confidence Case Shiller AMF ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Lance Tupper and Terence Gabriel are Reuters market analysts. The views expressed are their own)
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