Beyond the focus on developments in the Middle East conflict, investors will be turning their attention this Thursday to the launch of SpaceX’s roadshow. Elon Musk’s company aims to raise around $75 billion in what will be the largest initial public offering in history.
Report by Renta 4
European markets open lower (Eurostoxx futures down 0.4%, S&P futures down 0.4%, Nasdaq futures down 0.5%) after Wall Street yesterday broke its nine-day winning streak, with the T-bond yield hovering around 4.5% despite strong macroeconomic data, with both the ISM services index and the private ADP employment figures accelerating and exceeding expectations.
The highlight of Thursday’s session is the start of SpaceX’s roadshow, the largest IPO in history, which aims to raise $75 billion (with a green shoe option up to $86 billion) at an implied 100% valuation of the company of at least $1.8 trillion (a multiple of 93x sales). If S&P adopts the fast-track rule like Nasdaq (which shortened the waiting period from 3 months to 15 days and tripled the market capitalisation calculation for shares with low free float) and FTSE Russell (which reduced the waiting period to 5 days), the automatic passive demand from index funds would be nearly $20 billion.
Meanwhile, Alphabet yesterday increased its capital raise to $84.75 billion (as opposed to $80 billion announced two days earlier), a sign of very strong investor demand to fund its AI agenda. Regarding corporate results, Broadcom’s figures at the close of trading yesterday stand out; although they slightly exceeded expectations, the company is experiencing a correction of nearly 10% in after-hours markets as a result of chip sales guidance falling short of expectations. Despite these weaker forecasts, Broadcom highlighted its contracts to deploy computing capacity for clients such as Meta and OpenAI, and its participation in a $36 billion debt financing structure with Apollo and Blackstone to help Anthropic and OpenAI acquire its chips.
Weak truce in the Middle East
Beyond corporate matters, the focus remains on the Middle East; the announcement of a ceasefire agreement between Israel and Lebanon, conditional on a complete cessation of hostilities by Hezbollah and its withdrawal north of the Litani River, has led to a slight fall in oil prices (with Brent hovering around $97), following days of sharp cumulative rises (up 5% since last Friday) driven by fears of supply shortages. Although this pact aims to unblock negotiations between Washington and Tehran to reopen the Strait of Hormuz, the viability of the truce is extremely fragile: political talks remain at a standstill, sporadic fighting persists, Hezbollah has not confirmed its adherence, and Iran is threatening to strike Israeli territory if the bombing of Beirut continues.
Whilst US President Donald Trump downplays the security risks in the strait and faces domestic political pressure following a House of Representatives vote to curb US military involvement, financial analysts warn of excessive optimism in the market and project that Brent could climb to $130 per barrel if the blockade of the sea route drags on amid the steady decline in global crude oil inventories.
