Fragile ceasefire meets IPO revival

Summary

Moving Markets – Episode Summary

Episode Title: Fragile ceasefire meets IPO revival
Date: June 10, 2026
Host: Jan Bob
Guests: Lucia Cuculovic (Market Updates), Matthieu Racheta (IPO Market Insights)

Episode Overview

This episode addresses two major topics shaping global financial markets:

• The fragile geopolitical situation in the Middle East following renewed US-Iran military activity
• The resurgence of the IPO market, with the SpaceX IPO imminent and broader implications for investors
  The discussions deliver timely analysis of regional market moves, sector performance, economic data, and evolving investment trends.

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1. Middle East Escalation & Market Fallout

Situation Update

• US-Iran Conflict:

  • Overnight, the US launched strikes against Iran after a US army helicopter was downed. Iran retaliated by targeting Gulf nations, including Bahrain, Kuwait, and Jordan.
  • “This really throws a wrench into the already fragile ceasefire with Iran. It’s technically still in place, but clearly under immense strain.” – Lucia Cuculovic [01:02]

• Political Backdrop:

  • Just a day before, President Trump had signaled a possible Iran deal—underscoring the pace at which the situation deteriorated.

European Markets' Reaction

• Declines Continue:
  • Stoxx 600 fell for a third consecutive day, down ~0.5%.
  • Strong sector divergence:
    • Food & Beverage rose over 2%.
    • Mining/Energy fell ~2.5%.
  • Notably, commodity-related stocks were already pressured before the attacks.
• Oil Prices:
  • Despite fresh conflict, oil prices were “even trading slightly lower” at last check due to increased traffic in the Strait of Hormuz (per US Energy Secretary Chris Wright). [02:27]
• Quote:
  • “Maybe somewhat surprising, oil has not moved too much since the attacks overnight.” – Lucia Cuculovic [02:52]

Economic Data Highlights

• Germany:
  • Industrial production (+0.4% in April), below expectations.
  • Exports and imports surprised to the upside.
• US:
  • Equities: S&P 500 down 0.3%, NASDAQ down 1%, while the Dow ended positive.
  • Continued underperformance in semiconductors (iShares ETF down >4%).
  • Some bright spots: healthcare, banking, and housing.
    • “The latest data showed existing home sales jumping about 3.2% in May, which was ahead of expectations.” – Lucia Cuculovic [04:14]
• US Trade Deficit:
  • Narrowed almost 50% YTD, attributed to Trump’s 'Liberation Day' tariffs. [05:03]

Asia-Pacific Updates

• China:
  • Producer prices up 3.9% YoY in May (fastest in nearly 4 years), consumer inflation modest at 1.2%.
  • Gasoline prices surged 23%+.
• Japan:
  • Producer prices up 6.3% YoY—putting rate hike pressure on the Bank of Japan.
• Market performance:
  • Asia-Pacific mostly down; South Korea led declines, while India and Australia were more resilient.
  • Anticipation for US CPI release later that day (forecast: 4.2% headline, 2.9% core). [06:23]

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2. IPO Market Revival & Investment Implications

State of the IPO Market

• Revival After “Hibernation”:
  • “So the short answer is the IPO market is back. After four fairly quiet years, activity has picked up sharply…” – Matthieu Racheta [07:28]
  • 44 US IPOs so far this year (market cap >$25M), raising ~$28B—the best year since 2021.
• Mega-IPOs on the Horizon:
  • SpaceX IPO on Friday cited as a bellwether.
  • Other major private firms (OpenAI, Anthropic, etc.) also in the pipeline.
    • “IPO proceeds could reach as much as $225 billion this year, which would be a new record.” – Matthieu Racheta [07:59]
• Market Absorption:
  • Strong demand expected, with corporate buybacks outpacing new equity issuance.

Changing Selection Criteria & Index Considerations

• Investor Selectivity:
  • “What's also different compared to previous IPO booms is that investors have become much more selective… Investors want to see a credible path to profitability and reasonable valuations.” [08:27]
• Index Inclusion Rules:
  • Russell allows entry after 5 trading days, Nasdaq after 15 (for large IPOs), both easing free float requirements.
  • S&P/Dow Jones remains conservative: 12 months listed, 10% free float, profitability criteria.
    • “In the case of Russell and Nasdaq, demand for index funds could arrive within days rather than months…” – Matthieu Racheta [10:10]

What Makes a Winning IPO?

• Historical Factors for Post-IPO Success:
  1. Growth: Above-average revenue growth correlates with returns.
  2. Profitability: Companies close to break-even (<2 years) outperform.
  3. Valuation: Reasonable pricing leads to better returns.
  • “Don’t focus too much on the excitement of listing day. Focus more on growth, profitability and valuations.” – Matthieu Racheta [11:55]
• Lockups & Free Float:
  • Stocks often pressured near lockup expiration, but strong companies rebound within months.

Is the IPO Revival a Bull Market Warning?

• Perspective on “Bubble” Warnings:
  • “...large IPO waves have not been a reliable indicator of market tops.” – Matthieu Racheta [12:33]
  • Previous peaks (1999, 2021) had far higher IPO volumes and less supportive macro conditions.
  • Current environment: Strong earnings (especially in AI), strong corporate buybacks, improving capital markets sentiment.

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Notable Quotes & Moments

• On geopolitics & markets:
  • “You see how rapidly things can change.” – Jan Bob [01:17]
• On resurgence in IPOs:
  • “This feels less like speculation and more like a healthy reopening of the IPO market.” – Matthieu Racheta [08:37]
• On historical lessons:
  • “Fundamentals still matter.” – Matthieu Racheta [10:44]
• On index fund flows:
  • “For investors, the path for prior companies to major benchmark considerations and is becoming much shorter and faster than ever before.” – Matthieu Racheta [10:23]

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Key Segment Timestamps

| Segment | Timestamps | |-----------------------------------------------|-----------------| | Middle East escalation & market reaction | 00:02 – 03:20 | | US markets, semiconductors, & housing | 03:20 – 04:49 | | US trade deficit & tariffs | 04:49 – 05:22 | | China & Japan producer price data | 05:22 – 06:18 | | Asia-Pacific & daily data lookout | 06:18 – 06:51 | | IPO market revival—segment intro | 07:01 – 07:28 | | IPO pipeline & capital absorption | 07:28 – 08:37 | | Index rule changes & impact | 08:49 – 10:29 | | What differentiates strong IPOs post-offering | 10:29 – 12:16 | | IPO cycles vs market cycles | 12:16 – 14:02 |

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Summary

This episode captures a moment of market tension and transition: heightened geopolitical risk is clashing with fresh optimism in equity issuance and capital markets. Listeners come away with both macro-level context (conflict, sector divergence, global economics) and actionable insights on IPOs, index inclusion, and investment due diligence. As the SpaceX IPO looms, the revival is framed as healthy and fundamentally driven, not speculative—a nuanced, timely signal for investors.

Transcript

[A]

Good morning from Julius bear. Today's Wednesday, the 10th of June. My name is Jan Bob, and this is Julius Baer's Moving Markets podcast. Stocks resume their slide as tech remains under pressure and American forces launch strikes against Iran. We'll be unpacking that and the rest of the latest market moves with Lucia Cuculovic in a minute. And then I'll be catching up with Matthieu Racheta for his view on the IPO market ahead of the much anticipated SpaceX IPO this Friday. But now let's start with the latest market news. Good morning to you, Lucia. Good morning, Jan. Now, we woke up this morning to a pretty significant escalation in the Middle East. American forces carried out strikes against Iran following the downing of a US army helicopter, and Iran has responded in kind. What are we seeing unfold, Lucia?

[B]

Unfortunately, overnight we saw Iran target several Gulf nations, Bahrain, Kuwait and Jordan specifically. This really throws a wrench into the already fragile ceasefire with Iran. It's technically still in place, but clearly under immense strain. Just yesterday, President Trump was suggesting a deal with Iran might be possible this week. So you see how rapidly things can change.

[A]

Yeah, and yesterday, before everything unfolded, Europe saw a bit of a pullback, seemingly driven by caution surrounding the Middle East. Can you walk us through what happened during the trading day?

[B]

Yes, European markets did give back some of their earlier gains, marking the third day in a row of declines. The broader Stoxx 600 index ended down around half a percent. Interestingly, we saw a real split across different industries. Food and beverage actually performed well, climbing over 2%. But companies tied to commodities really suffered. Mining and energy stocks took the biggest hits, falling around 2.5%.

[A]

Yeah, I mean, that sector divergence is a big topic recently and it's certainly striking given what we know about de escalating tensions. Was there anything specific driving those declines in the commodity space yesterday before the overnight attacks?

[B]

Yeah, there was. So comments from U.S. energy Secretary Chris Wright actually contributed to it. He pointed out that traffic through the Strait of Hormuz was increasing significantly and this put downward pressure on oil yesterday. And maybe somewhat surprising, oil has not moved too much since the attacks overnight. When I last checked, Jan, oil was even trading slightly lower.

[A]

That is interesting. Now, beyond the Middle east, what other factors were influencing European sentiment?

[B]

So we did get some fresh economic data out of Germany. Industrial production ticked up by about 0.4% in April, which is decent, but it did come in a little below expectations. Interestingly though, exports and imports surprised to the upside, which suggests there's still Some resilience there.

[A]

And if we move across the Atlantic, how did the US Markets fare yesterday?

[B]

Well, Jan, it was a fairly similar story with markets facing some headwinds. Equities were broadly lower. The S&P 500 dropped 0.3% and the NASDAQ fell around 1%. The Dow actually held up a bit better, ending the day in the green. And one area that really stood out was semiconductors once again. So, after a bit of a bounce on Monday, that momentum didn't last Yesterday, with the IShare Semiconductor ETF down more than 4%. Names like Micron and Broadcom, which had already seen sharp declines last week, they tried to rebound, but those gains lost steam as well.

[A]

Yeah, so it sounds like the AI narrative might be taking a breather. Were there any bright spots in the US Market?

[B]

Actually, yes, there were a few. So, interestingly, some of the more traditional old economy sectors held up pretty well. Healthcare and banking, for example, both managed to move higher even as the broader market was under pressure. And another area worth highlighting is housing. The latest data showed existing home sales jumping about 3.2% in May, which was ahead of expectations. And we also saw the median sales price for houses move higher. So despite higher mortgage rates, there is still clear demand in the housing market.

[A]

Interesting. And it's encouraging news for the very important housing sector in the U.S. and if we zoom out a bit further, we also got some data on the US Trade deficit. What did that show?

[B]

Well, quite a notable shift, actually. The trade deficit has narrowed quite significantly. It's down almost 50% year to date. A big part of that seems to be linked to President Trump's so called Liberation Day tariffs, which do appear to be having the intended effect of curbing imports.

[A]

Okay. And turning to Asia Pacific markets overnight, we did get some macro data out of the region, particularly from China. What stood out there for you, Lucia?

[B]

Yeah, so the big surprise was on wholesale prices. China's producer prices rose 3.9% year on year in May, the fastest in nearly four years. And this was driven by higher raw material costs. Consumer inflation was softer, though, at 1.2%, although gasoline prices jumped more than 23%. So quite a sharp increase there.

[A]

And we also got similar data out of Japan, right?

[B]

Yes. Japan's producer prices rose 6.3% year on year, and that's the fastest pace in about three years. And it keeps the pressure high on the bank of Japan and supports the case for further rate hikes next week.

[A]

All right, and how did markets in the region react? And what should we be watching out

[B]

for today, markets in Asia Pacific were mostly lower. South Korea led the declines, while India and Australia held up better. And today, all eyes are on US CPI. It's expected at 4.2% headline and 2.9% core. We'll also get hourly earnings. And then the bank of Canada is up as well. Otherwise, Jan, it's a fairly quiet day with US Futures currently pointing slightly lower.

[A]

All right, thank you very much, Lucia, for coming to our show today.

[B]

Thanks for having me, Jan.

[A]

And now, Matthieu, good morning to you as well. Great to have you on the show today. Good morning, Jan. Now, Matthew, everyone is talking about the IPO of SpaceX that is going to take place this Friday, and it won't be the last mega IPO this year. So after years of hibernation, the IPO market suddenly seems to be back in the spotlight. How would you describe the current state of the market?

[C]

So the short answer is the IPO market is back. So after four fairly quiet years, activity has picked up sharply. So so far this year, 44 companies with a market capitalization over 25 million have already gone public in the US and together they have raised around US$28 billion. So that's actually the to the year since 2021. But what makes this story particularly interesting is that you're probably still in the early innings. So some of the biggest private companies in the world are still waiting in the wings. SpaceX you mentioned, but also OpenAI and Tropic are just a few examples here. If a large part of that pipeline comes to the market, IPO proceeds could reach as much as 225 billion US dollar this year, which would be a new record. That naturally raises the question whether the market can absorb all that supply. In our view, the answ. Yes, and that's because corporate buybacks are still expected to exceed total equities issuance this year, which provides an important source of demand for equities. What's also different compared to previous IPO booms is that investors have become much more selective. So companies are no longer rewarded simply for growing fast. Investors want to see a credible path to profitability and reasonable valuations. So this feels less like speculation and more like a healthy reopening of the IPO market. That's why we think the IPO story still has room to run.

[A]

I mean, that's big numbers. And it's not just the IPO market that is changing. Index providers have also updated some of their rules. Why should investors pay attention to that?

[C]

So this is Actually one of the most important developments that many investors are overlooking. Historically, newly listed companies often had to wait many months before they could enter major benchmark indices. But their waiting period is getting much shorter, at least for some index providers. So Russell now allows eligible companies to join its indices after only five trades, trading days. While Nasdaq has also shortened the waiting period to 15 trading days for large enough IPOs. So both providers have also relaxed some of the requirements around free float, so making it easier for large companies with a low initial flow to qualify for index inclusion. Then we have the S and P, Dow Jones, they have taken a much more conservative approach, so it decided not to change its rules. So companies still need to meet the existing requirements, including being at least 12 months trading in public markets, then also a minimum free float of 10% and more importantly, being profitable in terms of gap reporting in the current quarter as well as over the previous four quarters. And this is important as 90% of passive AUM are still benchmarked to the S and P. So that would have been really what would move the needle in terms of passive flows. But in the case of Russell and Nasdaq, demand for index funds could arrive within days rather than months after the ipo. So for investors, the path for prior companies to major benchmark considerations and is becoming much shorter and faster than ever before.

[A]

So quite important changes. Matio. Now, investors often get excited about the IPO day itself. But historically, what has separated the winners from the losers after they go public?

[C]

So the biggest lesson from history is that fundamentals still matter. So when we look at the best performing IPOs, three factors stand out. First, growth. So companies with above average revenue growth have generally delivered much stronger returns after listing. Second, profitability. So among recent IPOs, companies that were expected to become profitable within one or two years significantly outperformed those with a much longer path to profitability. Investors are willing to pay for growth, but they still want to see a realistic route to earnings. And third, valuations. So even great companies can disappoint if they come to the market at excessive valuations. To fact recent IPOs that listed at lower price to sales. So in fact recent IPOs that listed at lower price to sales multiples delivered much better returns than those that entered the market at very rich valuations. There's also another aspect that investors sometimes underestimate and that's free float and lockup expirations. So history shows that IPO stocks often come under pressure before lockup periods which are usually set at 180 days expire because Additional shares may enter the market, but once that extra supply has been absorbed, fundamentally strong companies often have recovered quite quickly within two to three months. So the takeaway is simple. Don't focus too much on the excitement of listing day. Focus more on growth, profitability and valuations. And those have historically been really the factors that differentiate between the strong and the weak IPO candidates.

[A]

Very interesting. And whenever IPO activity picks up, investors start talking about 1999 or 2021. Is the current IPO wave really a warning sign that we are nearing the end of the bull market? What's your view here?

[C]

So it's a popular comparison, but we think it's somewhat misleading. So it's true that IPO activity often increases when investor confidence is high. But history shows that large IPO waves have not been a reliable indicator of market tops. So in fact, if you look at previous mega IPOs, global equity markets generally continue to perform during the following six months. So the IPO itself is often not the event that entered the bull market. And more importantly, today's environment looks very different from both 1999 and 2021. So this year the number of IPOs is on track to reach around 100 deals. Big deals here. That's close to the long term average. And compare that with more than 250 IPOs in 2021 on almost 400 during the dot com bubble in 1999. And the macro backdrop also matters. I think this is really the big differentiator here. So in both 1999 and also 2021, monetary conditions are becoming less supportive. So the Fed was hiking rates and also economic growth was slowing. So today the situation is very different. We have earnings growth which remains exceptionally strong, particularly in AI related areas. And corporate buybacks continue to provide significant support for equity markets. So rather than seeing the IPO revival as a warning sign, we view it more as a sign that confidence in capital markets is improving again and activity remains important. But the return of IPOs is not in itself a reason to become bearish on equities.

[A]

Wonderful. Thanks very much, Matthew. Really good to hear your thoughts on this very important and timely topic.

[C]

Thanks for having me. Always a pleasure.

[A]

And that is all for today. A big thank you to Luzija and Mathieu for sharing their views and thank you all for tuning in. If you enjoyed today's show, don't forget to subscribe if you haven't already. And please also leave us a review on whichever platform you like to listen on. And do join us again on Thursday when Bernadette will be your host and with a fresh lineup of experts talking about what is moving markets. Until then, I wish you all a great day. Bye for now. The information and opinions expressed in this podcast constitute marketing material and are not the result of independent financial or investment research. Please refer to www.juliusbear.com legal podcasts for further other important legal information.