After a few days of relatively modest moves, this is how it ended for the benchmark indices on the New York Stock Exchange on the penultimate trading day of the week:
- The Nasdaq index rose 0.8 percent.
- The Dow Jones index rose 1 percent.
- The Standard & Poor’s 500 rose 0.8%.
The price of oil continued to rise throughout the day, now reaching around $93 per barrel, after rising by more than seven percent last month.
US government interest rates have fallen somewhat since Wednesday evening. The two-year interest rate is about 4.97 percent, while the ten-year interest rate is about 4.23 percent.
Following yesterday’s inflation numbers, Producer Price Index numbers were released before trading on Thursday, which showed US producer prices increased by 1.6 percent year-on-year in August. It was somewhat higher than previous expectations.
The largest IPO of the year
However, on Thursday, the eyes of the market were on Arm as the UK-based chipmaker made its Wall Street debut, in its biggest listing since 2021.
This happened after SoftBank, which still owns just over 90 percent of the company after the listing, completed its IPO (initial public offering) late on Wednesday evening, raising $4.87 billion. The stock price fell to $51 apiece, the high end of the range regulators were aiming for.
In the end, the stock rose 24 percent over the offering price, ending the trading day at a closing price of $63.59. According to Bloomberg, this gives a total market value of about $65 billion, up from about $50 billion before trading began.
– When the offering was subscribed at least ten times, it is not surprising that it went up, plus there is a lot of hype. But we’ve seen at Nvidia that hype can work, as the money rolls in, says Nordea investment director Robert Ness.
There has been significant interest in IPOs for several months after a long, cold winter for new IPOs. Softbank CEO Masayoshi Son has put aside almost all other work duties over the past year and worked at Arm. He also attended a meeting on Wednesday evening where prices were set.
Key investors in the issue included several of the company’s largest clients, including Apple, Google and Nvidia.
Investment manager Robert Ness. (Photo: Eyvind Senset)
A long-awaited improvement for SoftBank
In total, Softbank sold 95.5 million Arm shares in what is described as a long-awaited improvement for the Japanese group.
The past few years have been marked by huge losses for, among other things, the Vision Fund, which has pumped billions of dollars into the most successful technology companies and startups.
When the pricing of ARM shares was decided on Wednesday evening, some facilitators and senior managers pushed for an increase in the unit price of the shares. The son disagreed, writes Bloomberg. He didn’t want to risk a “healthy” market debut just to get about a hundred million dollars in additional revenue.
The successful listing also helps other companies list in the coming months. Earlier this week, Birkenstock went public.
-It’s not the biggest ‘bargain’ we’ve seen and it was definitely priced right. Doing so offers some hope that the window for new listings may be about to reopen after more or less closing for the past 18 months, Art Hogan, chief strategist at B. Riley Financial, told CNBC.
Interest rate hikes from the European Central Bank
Shortly before the open on Wall Street, it became clear that the European Central Bank was raising interest rates again.
In advance, it was completely open whether there would be an interest rate increase or not. Thirty-two out of 67 analysts surveyed by Bloomberg believe in a rate hike, while the market expects a more than 60 percent chance of a rate hike.
The key deposit rate is now at an all-time high, having been raised from -0.5 to 4.0 per cent in just over a year. The European Central Bank has now raised interest rates at its last 10 interest rate meetings.
It is high inflation that has forced the horse into treatment, after a decade of negative interest rates. In August, consumer prices remained 5.3 percent higher than in the same month last year – well above the central bank’s 2 percent inflation target.
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