Live Markets: IPO trick or treat

AvidXchange Holdings

19/10/2021 18:59

* Major U.S. equity indexes gain; Nasdaq out front
    * Energy leads major S&P sector gainers; staples weakest
group
    * Dollar down; gold, crude, bitcoin rise
    * U.S. 10-Year Treasury yield ~1.63%

    Oct 19 - Welcome to the home for real-time coverage of
markets brought to you by Reuters reporters. You can share your
thoughts with us at markets.research@thomsonreuters.com
    
    IPO TRICK OR TREAT (1345 EDT/1745 GMT)
    There's no slowdown in sight for the IPO market as 18
companies hope to go public before Halloween.
    Choppy aftermarket deal performance, however, has spooked
investors. Several firms bagged their listing plans recently,
 urn:newsml:reuters.com:*:nL1N2R21LV, including Peloton  PTON.O  rival iFIT Health &
Fitness.  urn:newsml:reuters.com:*:nL1N2R31P2
    Even the offering for accounts payable automation software
firm AvidXchange  AVDX.O , which appeared headed for a sweet
outcome, failed to pay off for the IPO investors. AVDX shares
are still trading about 4% below their issue price on Tuesday.
 urn:newsml:reuters.com:*:nL1N2R9274
    This backdrop certainly sets up a buyers' market for new
issues. Below is the current roster of IPO candidates, by
anticipated debut date and approximate deal size:
    
    Oct 20:
    Stronghold Digital Mining  SDIG.O  (cryptocurrency) ($100m)
    Oct 21:
    Enfusion  ENFN.N  (financial software) ($300m)
    P10  PX.N  (asset management) ($300m)
    Portillo’s  PTLO.O  (casual restaurants) ($375m)
    Runway Growth Finance  RWAY.O  (BDC) ($100m)
    Ventyx Biosciences  VTYX.O  (biotech) ($125m)
    Vita Coco  COCO.O  (beverages) ($225m)
    Winc  WBEV.N  (direct-to-consumer winemaker) ($75m)
    Oct 22:
    Aris Water  ARIS.N  (frack-water recycling) ($300m)
    Minerva Surgical  UTRS.O  (medical devices) ($100m)
    Xilio Therapeutics  XLO.O  (biotech) ($125m)
    Oct 27:
    Informatica  INFA.N  (software) ($900m)
    Rent the Runway  RENT.O  (direct-to-consumer clothing)
($300m)
    Arteris  AIP.O  (semiconductors) ($75m)
    Oct 28:
    Candela Medical  CDLA.O  (medtech) ($250m)
    Ensemble Health  ENSB.O  (healthcare software) ($600m)
    Fluence Energy  FLNC.O  (alt energy) ($700m)
    GlobalFoundries  GFS.O  (semiconductors) ($2.5b)    
                
    (Lance Tupper)
    *****
    
       
    
    CREDIT SPREADS AND THE THREE BEAR FLATTENER PROBLEMS (1236
EDT/1636 GMT)
    A recent sharp bear flattener move in the U.S. Treasury
yield curve poses at least three problems for corporate bond
credit spreads that could lead to widening for investment-grade
debt and underperformance in the belly of the spread curve,
according to a BofA Global Research report this week. 
    The yield curve move, which resulted from market pricing for
an earlier start to Federal Reserve rate hikes, "reduces
incentives for fixed-income investors to move out the curve,
both into credit and out the maturity curve within credit," BofA
credit strategists wrote.
    Secondly, a flatter yield curve makes U.S. corporate bonds
less attractive on a dollar-hedged basis for foreign investors
unless other yield curves flatten globally to the same extent,
they added.
    "The third problem with a bear flattener is the risk of
sizable outflows in the belly of the curve as, unlike in the
front and back ends, there would be little natural buying on
weakness and thus the potential for sizable spread widening,"
the report said.
    Here is a chart of the U.S. 30-Year Treasury - U.S. 5-year
Treasury yield spread  US5US30=RR :
     
    
    (Karen Pierog)
    *****
    
    CHANGES COMING TO THE GICS? (1215 EDT/1615 GMT)
    S&P Dow Jones Indices and MSCI Inc  MSCI.N  announced late
Monday they have begun a consultation with members of the
investment community on potential changes to the Global Industry
Classification Standard (GICS) structure. 
    The GICS was developed in 1999 and is a four-tiered
classification system comprised of 11 sectors, 24 industry
groups, 69 industries and 158 sub-industries, with each company
assigned a single GICS classification at the sub-industry level
according to its principal business activity
    The consultation period began on Oct. 18 and is scheduled to
end on Dec. 20. S&P and MSCI said they would announce any
changes to the GICS structure by February 2022, although the
consultation "may or may not result in any changes." 
    The most recent reshuffle of the GICS came in September
2018, with the creation of the communication services sector https://www.reuters.com/article/usa-stocks-gics/a-close-up-of-wall-sts-new-sp-500-communication-services-sector-idUSL2N1W61WT
  .SPLRCL  that siphoned off names such as Facebook  FB.O  and
Alphabet  GOOGL.O  from the tech sector  .SPLRCT  and Netflix
 NFLX.O  from the consumer discretionary  .SPLRCD  sector. 
    Current topics up for consideration would affect the energy
sector  .SPNY , the consumer discretionary  .SPLRCD  and
consumer staples  .SPLRCS  sectors, as well as the tech
 .SPLRCT  and industrials  .SPLRCI  sectors. Also up for
discussion are classifications for banks, REITs, transportation
and the definition of pharmaceuticals for cannabis inclusion. 
    Below is a summary of potential changes, according to S&P
Dow Jones Indices:   
    
  
    (Chuck Mikolajczak)
    *****
    
    FLASHING YELLOW LIGHT ON EARNINGS (1108 EDT/1508 GMT)
    While estimate-beating big bank third quarter profits sent
stocks higher last week, Nuveen said it's approaching the rest
of the earnings season "with a degree of caution."
    In a report this week, Saira Malik, CIO, head of global
equities at Nuveen, said that factors such as COVID-19's Delta
variant, supply chains, inflation, and the end of federal
stimulus, will likely keep third quarter earnings growth rates
for S&P 500 companies in the 30% to 35% range, down from the
first quarter when they eventually topped 50%.
   "In fact, earnings revisions for the third quarter are the
lowest of 2021 so far, with estimates increasing by a modest
3%-4% since the end of June, versus double-digit percentage
increases in the previous two quarters," the report said.
"Guidance has been more moderate, too; nearly half of companies
reporting so far have issued negative (earnings per share)
guidance."
    Still, Nuveen noted that trailing and forward-looking
valuations for the S&P 500 have fallen 10% to 20% from first
quarter levels, which should allow equities to grind higher even
in the face of decelerating earnings growth. 
    "The best-positioned companies are those that can build
inventories and protect/grow their margins until the headwinds
created by inflation and global supply chain disruptions begin
to dissipate," it added.
    
    (Karen Pierog)
    *****
    
    MMM INFLATION (1025 EDT/1425 GMT) 
    'Mmm Danone' has long been the ending note of TV commercials
for the French consumer group's yoghurts, but today it has
somewhat of a sour ring to it. 
    Danone shares have been in a downward trend all session, and
are now falling about 3%, the worst performance of the blue
chips which make the EURO STOXX 50 index.     
    The group's Q3 earnings themselves - the group stuck to its
2021 guidance - don't seem so much to blame for the poor
performance. 
    "It's the comments about the inflation and the supply
chain", argued Stephane Ekolo, global equity strategist at
Tradition. 
    CFO Juergen Esser told analysts in a conference call that
inflation costs were expected to rise at least 8% in 2022 and
said shipping in Asia was under high tension.
    But inflation is also seen impacting the price of milk,
ingredients and packaging. 
    While many strategists are trying to shift their portfolios
toward assets like commodities or financials stocks which
typically thrive when prices rise, Danone seems to be battling 
precisely on the front line of inflation, perhaps not the most
comfortable place to be. 
    As Citi analysts point out in their rating about Danone,
some of the risks to their target price of 66 euros lays in "the
wholesale price of milk, as dairy inputs equal about 15% of
sales". Price of PET resin, which is used to make containers for
food and drinks, is also an important cost. 
    See: Danone warns of growing cost pressures into 2022
 urn:newsml:reuters.com:*:nL8N2RF0PF

    (Julien Ponthus) 
    *****
    
    
    
    
    U.S. STOCKS POST EARLY GAINS, FANG INDEX HITS NEW HIGH (1006
EDT/1406 GMT) 
    Major U.S. indexes are higher in early trading on Tuesday as
upbeat quarterly reports from Dow  .DJI  components Johnson &
Johnson  JNJ.N  and Travelers  TRV.N  fired up risk appetite.
 .N 
    With their early gains, JNJ and TRV are responsible for
almost half of the DJI's early rise.
    Meanwhile, the NYSE FANG+TM index  .NYFANG  has hit a fresh
record high, and is on track to rise for a 5th-straight day.
    The S&P 500  .SPX , Nasdaq 100  .NDX  and Nasdaq Composite
 .IXIC  are also on track for a fifth-straight day of gains.
    Meanwhile, the first U.S. bitcoin futures ETF  BITO.K  is
rising slightly in its market debut.  urn:newsml:reuters.com:*:nL4N2RF317 Bitcoin
 BTC=BTSP  is up around 1%.
    Here is your early U.S-trade snapshot:
    
    
    (Terence Gabriel)
    *****
    
    
    NASDAQ 100 FUTURES: WIN STREAK MAY BE STRETCHING IT (0900
EDT/1300 GMT)
    CME e-mini Nasdaq 100 futures  NQcv1  are quoted up in
premarket trade, putting them on pace for a 5th-straight day of
gains. That said, over the past three months, multi-day winning
streaks have led to sudden setbacks:
       
    
    From late-July into early-October, NQcv1 has struggled in
the wake of a three-to-five-day run of gains. There have been
six such streaks over this period, and on average, NQcv1 then
sold off nearly 3% over the next four trading days or so.
    NQcv1 last rose more than five-straight days with a
seven-day win streak in mid-June.
    The futures are also rapidly nearing resistance hurdles in
the form of the 76.4%/78.6% Fibonacci retracement zone of the
Sept. 7-Oct. 4 decline, in the 15,386.54/15,415.88 area, and the
Sept. 27 high, at 15,399.25.
    This resistance should provide an interesting test for the
futures, especially given the current win streak, and that the
Nasdaq  .IXIC  has been relying on its largest caps to underpin
gains.  urn:newsml:reuters.com:*:nL1N2RE0RK 
    Meanwhile, e-mini S&P 500 futures  EScv1  are also on track
for a 5th-straight day of gains. The S&P 500 index  .SPX ,
Nasdaq 100 index  .NDX , Nasdaq Composite  .IXIC , and NYSE
FANG+TM Index  .NYFANG  have all risen four-straight days.
    
    (Terence Gabriel)
    *****
     
    FOR TUESDAY'S LIVE MARKETS' POSTS PRIOR TO 0900 EDT/1300 GMT
- CLICK HERE:  urn:newsml:reuters.com:*:nL8N2RF3QL

    
    
    
    
    
    
    

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
NQcv110192021    https://tmsnrt.rs/3aXBnyJ
Earlytrade10192021    https://tmsnrt.rs/3aP6rkv
Summary of topics for 2021 GICS consultation    https://tmsnrt.rs/3DMfYoO
US5US3010192021    https://tmsnrt.rs/3lTMYFq
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Terence Gabriel and Lance Tupper are Reuters market analysts.
The views expressed are their own)