Here are 3 interesting things that happened last week in finance.
📈 US Stock Market soared to best day in more than 2 years
⛵ Why boAt cancelled their IPO.
🪙 Bitcoin & Gold correlation hits the highest level in one year.
Read Time: 1.2 mins
NASDAQ Soars
Dow up 1,200 points on cooling inflation
Nasdaq composite packed what could be a year’s worth of gains into one day by roaring 7.4% higher. Wall Street blasted off Thursday to soar to its best day in more than two years as exhilaration swept through markets after a report showed inflation in the United States eased last month by even more than expected.
US Stock Market Key Points
- The S&P 500 surged 5.5%.
- Prices jumped for everything from metals to European stocks.
- Bitcoin rose from its steep plunge from crypto industry's latest crisis of confidence.
- In the bond market, Treasury yields tumbled sharply as investors pared bets for how aggressive the Federal Reserve will be in hiking interest rates to get inflation under control.
Stack’s Verdict: Although, the slight cooling in US inflation is welcome relief yet the possibility of a squeeze in the rate hike size is still a long way. But for now, stocks are surging and with the dollar taking a bow, gold prices gained momentum.
Why boAt cancelled IPO
Second-lowest new Demat accounts added this year
About 1.77 million new dematerialised accounts were added in October — 28% below the previous nine-month average of 2.5 million. Broking industry officials said the fall in Demat account additions in October was on account of holidays due to the festive season and also due to a lack of initial public offerings (IPOs).
Fewer IPOs in 2022
As against over 60 companies that took the IPO route last year, only 16 companies have floated their initial public offers this year. Volatile market conditions and ‘strategic considerations’ are usually the reasons cited for not going public.
Why boAt cancelled their IPO
Imagine Marketing Ltd, boAt's parent company, has announced that the company would raise Rs 500 crore from its existing shareholder to fuel the expansion of its business and was postponing its initial public offering (IPO) plans.
Stack’s Verdict: The volatility in the secondary markets impacts the issuer Company’s confidence, not only about the IPO sailing through but also about the post-listing response. That said, a meaningful revival of the primary markets, though some time away, may be driven by stable secondary market conditions amid better Q2 FY23 results.
Bitcoin & Gold
Bitcoin behaves like gold
Bitcoin’s relationship with gold has historically been used as a way to measure how confident investors are in the asset as a store of value. The two were closely linked from June 2021 to February 2022, but the correlation turned negative in March.
Bitcoin-Gold Highest Correlation
At the beginning of October, the 30-day correlation between the two assets reached over 0.3, its highest in over a year, even as cryptocurrencies decoupled from equities. The 30-day correlation has ranged between positive and negative 0.2 since late last year.
Stack’s Verdict: Does any of this mean you should invest in Bitcoin like you would in gold? Not at all. There’s not enough historical data to tell if Bitcoin behaves like gold in the long run. Make sure you allocate less than 10% of your portfolio with cryptocurrency if you have a good enough investment corpus.
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