No surprise from the Fed: As the markets had expected, the Fed left benchmark interest rate unchanged. Nevertheless, markets tanked. The Fed signaled borrowing costs will likely stay higher for longer after 1 more hike this year. Fed Chair Jerome Powell said “we are committed to achieving and sustaining a stance of monetary policy that is sufficiently restrictive to bring inflation down to our 2% goal over time.” He emphasized the Fed will “proceed carefully” as it assesses incoming data and the evolving outlook and risks—echoing remarks he made at Jackson Hole last month.
ECB intend to maintain 4% interest rate: Francois Villeroy de Galhau, a member of the Governing Council, has stated that the European Central Bank intends to maintain a 4% interest rate for as long as necessary to control inflation, indicating a reluctance to consider future rate hikes at this point. These remarks follow the ECB's decision to raise borrowing costs in its most recent meeting, marking the tenth consecutive increase.
BoE ends interest rates hikes: Bank of England ends run of 14 straight interest rate hikes after cooler-than-expected inflation. The Monetary Policy Committee voted 5-4 in favour of maintaining this rate at its September meeting, with the four members preferring another 25 basis point hike to 5.5%.
BoJ sticks to ultra-low interest rate policy: Bank of Japan announced on Friday its widely expected decision to stick with an ultra-low interest rate policy, causing Japanese yen to fall. The policy comes even as Japan’s consumer price growth exceeded the central bank’s 2% target for the 17th consecutive month, with the “core” figure rising 3.1% in August.
IPO - It's probably overhyped: Arm Holdings and Instacart fails to outperform after analysts gave lukewarm ratings to the 2 companies that recently held highly anticipated IPOs. Currently Arm trades at $51.32 (IPO price $51) while Instacart trades at $30 (also its IPO price).
Scathing reviews by analysts: BTIG analyst Jake Fuller gave Instacart a “neutral” rating and warned that the company faces heavy competition from DoorDash and Uber Technologies in the slowly expanding market of grocery delivery. Susquehanna analysts assigned Arm a “neutral” rating and US$48 price target, saying the chip designer “appears to be pushing royalty rates to the limit, while also adding lower margin ‘subsystems’ revenue”.
Revival IPOs seems more unlikely now: As suggested last week, the performance of Arm and Instacart is being closely watched by corporates, analysts and investors as it is seen as a "beacon to try to decipher what is the sentiment, overall, of this marketplace". While we should definitely still continue to observe longer, signs are definitely pointing that the IPO dry spell is likely to stay.
