Shares of Arm surged in its highly anticipated stock-market debut Thursday, in a sign of the reviving fortunes of an IPO market that has been in the doldrums for most of the past two years.
The British chip designer’s stock closed up 25% from its $51 IPO price, at $63.59. Arm’s debut is also a win for SoftBank Group, the chip company’s owner. Arm is now valued at nearly $69 billion on a fully diluted basis, well above the roughly $32 billion SoftBank acquired it for in 2016. That is also more than the $64 billion implied by the Japanese technology conglomerate’s recent purchase of a 25% Arm stake held by its Vision Fund. Raising around $5 billion for SoftBank, Arm is the biggest U.S. offering since Rivian Automotive made its debut in early November 2021. SoftBank sold 10% of its Arm shares in the IPO. Arm doesn’t make chips, but it supplies circuit designs that are incorporated into billions of them. Arm listed its stock on the Nasdaq under the symbol ARM, and brought a taste of Britain to the stock exchange Thursday. On the second floor of the Nasdaq building in Times Square, the company set up “The Builton Arms” Pub—a play on its slogan, The Future is Built On Arm—and served fish and chips.

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On Thursday the SMI climbed 1.1 per cent to 11,098 points. Of the 20 SMI stocks, 19 posted price gains. The only loser was the Logitech share, which fell by 0.3 per cent in the absence of news. 17.86 (previously: 17.9) million shares were traded. Among the individual stocks Kühne & Nagel stood out with a plus of 2.7 per cent. This more than compensated for the previous day's losses in reaction to the news that investor Klaus-Michael Kühne was considering a counter-bid to the Mediterranean Shipping Company's (MSC) offer for the Port of Hamburg and Logistics (HHLA). Otherwise, gains rippled through all sectors, with defensive stocks such as heavyweight Nestle (+0.6%) or Swisscom (+0.1%) lagging slightly behind. Richemont (+1.7%), Novartis (+1.6%) and Geberit (+1.1%) met with lively demand. Swiss Life improved by 1.4%. The insurer had announced a share buyback last week at the presentation of half-year figures, which is to start at the beginning of October. The other two insurers within the SMI, Swiss Re (+1.4%) and Zurich (+1.2%) also advanced.

European equity markets closed significantly higher on Thursday, with investors believing that the European Central Bank (ECB) may have carried out the last interest rate hike in a series that began in July 2022. The Stoxx Europe 600 index gained 1.5% to 460.9 points. In Paris, the CAC 40 and SBF 120 both rose by 1.2%. The DAX 40 in Frankfurt climbed 1%, while the FTSE 100 in London added 2%. With inflation easing in the eurozone yet still too high, the European Central Bank (ECB) on Thursday raised its key interest rates for the tenth time in a row, while hinting that the increase could be the last in the current cycle of monetary tightening. The ECB also revised its economic forecasts sharply downwards, estimating Eurozone growth at 0.7% in 2023 and 1% in 2024. Industrial stocks with high capital requirements benefited from the downward adjustment of interest rate expectations, notably Alstom (+4.6%), Neoen (+4.3%) and Nexans (+6.4%). Survey-based research group Ipsos (-0.6%) lowered its sales growth forecast for this year on Thursday, citing difficult trading conditions in China and a lower-than-expected level of activity with major US technology clients. Specialist retailer Fnac Darty (-1.4%) withdrew its €300 million senior fixed-rate bond issue maturing in January 2029 on Wednesday evening, "in view of insufficiently attractive market conditions“.

Investors shrugged off rebounding inflation Thursday, scooping up stocks in a bet that a strong U.S. consumer and resilient labor market will keep the market humming. Thursday’s slate of economic news was heavy: Consumers spent more than expected in August, suppliers faced rising prices, and the European Central Bank lifted interest rates to the highest level in its history. The S&P 500 added 0.8%, with all 11 of its sectors finishing in the green. The tech-heavy Nasdaq Composite also rose 0.8%, and the Dow industrials gained 1%. Norwegian Cruise Lines and Carnival were among the day’s best performers, advancing 5.7% and 4.1% respectively to extend their gains this year. Rising fuel costs stand to hit profits at cruise operators, airlines and other transportation companies, but consumers are still traveling. Shares of online travel company Booking Holdings rose 2.6%. Shares of small-caps and energy companies, typically sensitive to the economic cycle, helped lift stocks Thursday. Marathon Oil climbed 2.9%, while the Russell 2000 index rose 1.4%. Shares of British chip designer Arm Holdings closed at $63.59 after its initial public offering priced at $51 per share, showing some positives for the cool IPO market and the continuing hype surrounding AI. Electric-vehicle maker Tesla added 1.7% on the day.

In Asia, major indexes broadly closed with gains on Friday. While the HSI in Hong Kong rises by 1.7 per cent, the Shanghai Composite only manages a meagre gain of 0.3 per cent. In Tokyo, the Nikkei-225 climbs 1.2 per cent. The share price of Arm parent Softbank increases by 2.1 per cent. The Japanese company had sold 10 per cent of its shares in the course of the Arm IPO. Arm Holdings soared about 25 per cent during its first day of trading at the Nasdaq on Thursday. In South Korea, the Kospi advanced 1.3 per cent. In the semiconductor sector, SK Hynix increases by 1.2 per cent.

Long-dated U.S. government debt yields advanced on Thursday, pushing the 2- and 10-year rates to their highest levels in a week, after a batch of stronger-than-expected data on producer prices and retail sales for August. The 10-year Treasury note yield rose by 4 basis points to 4.286%. The 2-year Treasury note yield gained 0.3% to 5.011%.

Target price Swatch I: Barclays lowers to CHF 255 (260) - Underweight

Baader upgrades UBS to Add (Reduce) - Target CHF 26.70

Richemont target price: Barclays downgrades to CHF 176 (180) - Overweight

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