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Wall Street extends losses as yields bite, Instacart jumps on debut

Instacart

Wall Street fell for the third straight trading day as the US bond yields continued to climb ahead of the Fed rate decision tomorrow. The US 10-year bond yield hit a fresh 16-year high of 4.36%, and the yield of the 2-year peer rose to 5.09%. Markets are pricing in the hawkish stance of the Fed, despite a widely expected rate hike pause. Risk aversion could continue to ride the sentiment, with the VIX rising slightly to above 14, while the S&P 500 finishing at under 4,450, just above the 50-day moving average.

The US dollar was slightly higher as the Fed meeting looms, and the other major currencies were mostly flat, except for the New Zealand dollar, which strengthened the most against the king dollar as its Treasury yield jumped ahead of the country’s second-quarter GDP release tomorrow.

On a positive note, Instacart’s shares jumped 12% on the debut day, with its valuation reaching more than US$11 billion. The shares opened trading at US$42, or a 40% surge from its IPO price of US$30, and closed at US$33.70. The grocery delivery firm is being marketed as a tech company as it thrives on accelerating its growth into online Ads and software, akin to Amazon and Meta, despite a much smaller market cap. With IPO activities heated up following Arm’s success, the marketing and data automation provider, Klaviyo, prices IPO at US$30 per share and is set to debut on Nasdaq at an anticipated market valuation of about $9 billion.

Asian markets will be awaiting the PBOC’s LPR rate decision today without expectations for further rate cuts. Futures point to a mixed open higher across the APAC region. The Nikkei 225 futures fell 0.87%, the ASX 200 futures slid 0.47%, and the Hang Seng Index futures were up 0.37%. 

Price movers:

  • 9 out of 11 sectors in the S&P 500 finished lower, with Energy leading losses, down 0.83%. Healthcare and Communication Services were the only two sectors that eked out gains, up 0.1% and 0.01%, respectively.
  • The marketing firm Klaviyo prices IPO at US$30 per share following Arm and Instacart’s debuts recently. The company raised the price from a planned price range of between US$27 and US$29 earlier. It will sell 19.2 million shares, raising US$576 million, with a a fully diluted value of about US$9 billion.
  • Walt Disney’s shares were down 3.6% on the announcement that the company will double its investment to about US$60 billion in Theme parks. The entertainment giant is facing challenges in the streaming business and considering sales of its traditional TV networks, such as ESPN and ABC.
  • Gold shows resilient moves on risk-off sentiment. Spot gold finished slightly lower but managed to grapple at the 50-day moving average around 1,932. The precious metal’s price rose for three trading days in the past four, up from key support of 1,900.
  • Bitcoin rose above 27 000 for the first time since 31 August. The upside movement may have been caused by technical trades as the largest digital coin found strong support at about 25,000. But the bullish moment may not be sustained unless it can break through near-term resistance at the 50-day moving average of about 27,700.

ASX and NZX announcements/news:

  • KMD Brands’ (ASX/NZX: KMD)sales hit a record of NZ$1.1 billion in fiscal year 2023, up 12.6% from a year ago. Its net profit fell 0.6% to NZ$36.6 million due to a slide in Katmandu’s sales in the fourth quarter.

Today’s agenda:

  • Australian MI Leading Index for August
  • China’s 1-year and 5-year LPR rate decisions
  • UK’s CPI for August

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