Marketbites: British Pound Keeps Getting Pounded
Portfolio Manager Commentary:
Stocks fell again to start the week Monday after a failed early rally. The Dow slipped into bear market territory as interest rates surged and turmoil has rocked global currencies. The S&P 500 declined 1.03%, the Nasdaq fell 0.60%, and the Dow dropped 1.11%.
Poor IPO performance so far this year has weighed heavily on the new issue market. Newly public companies have been among the worst performers in the stock market this year, contributing to a deep freeze in the IPO market. Around 87% of companies that went public in the U.S. last year are trading below their offering prices. As a whole, these companies are down more than 49% on average as of Friday’s close, according to Dealogic. By comparison, the S&P 500 is down 23% this year and the Nasdaq has fallen 31%.
The U.S. dollar continues to strengthen against foreign currencies such as the British pound. At one point on Monday, the pound fell to an all-time low of $1.0382. “Such U.S. dollar strength has historically led to some kind of financial/economic crisis,” wrote Morgan Stanley’s Michael Wilson, chief U.S. equity strategist, in a note. “If there was ever a time to be on the lookout for something to break, this would be it.”
Chart of the Day:
After spending a trillion dollars on its Belt and Road infrastructure program, China is now working to overhaul the troubled initiative. The program picked up after Chinese President Xi Jinping took office in 2012 and expanded the efforts. A slowing global economy, combined with rising interest rates and higher inflation, have left countries struggling to repay their debts.
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