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Printed: 10 December 2022 8:05 PM

News

18 Oct 2022 - 'Small Talk' - Mood Swings
By: Equitable Investors

'Small Talk' -  Mood Swings

Equitable Investors

October 2022


The market mood swings continued. Huge gains to get things rolling then a sharp reversal, felt most during the US trading session. Maybe the Reserve Bank of Australia (RBA) contributed to the positive start to the week globally when it raised interest rates by less than expected, leading to speculation the US Federal Reserve and others may be of a similar mind. But the Cleveland Fed President said that she has "not seen any evidence to warrant slowing the pace of hikes".

Globally, we note the amount of equity capital raised in the calendar year-to-date is down 65% relative to the same period in 2021. The US experience is worse at -85% and the Australasian experience a little better at -44%, according to dealogic.

Against that backdrop of rising rates and cautious capital markets, the number of businesses facing financial stress is on the rise. In the US, the number of commercial "Chapter 11" bankruptcy filings was up 76% year-on-year in the month of September, based on data from Epiq. Australian data at hand is not as fresh but bankruptcies in Australia increased to 717 in the month of July, the highest level since November 2019, according to Trading Economics' tally.

M&A is also softer - globally the value of deals is down 32% on dealogic's numbers, including a 40% decline in the US and a 57% plunge in Australasia. By sector, Technology and Healthcare have experienced the most significant pullbacks in corporate activity but even Utilities & Energy is down.


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Equitable Investors Dragonfly Fund


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