The ASX followed predictions and was up 1.21% or 85.80 points to 7,149.40 at close today, led by the financial sector with a 2.46% increase.
Of 11 sectors, 10 were higher at the close, with the energy sector remaining flat in the face of volatile oil price shifts.
Twenty Seven Co Ltd (ASX:TSC), Micro-X Ltd and Moho Resources Ltd (ASX:MOH) were the top performers today, gaining 33.33%, 25% and 22.22%, respectively, by market close.
Nickel was the real winner though, climbing 68.10% to an all-time high as Russia – which is the third-largest global producer of nickel – threatens to cut off western countries from commodity exports in response to sanctions.
Petrol prices show no sign of falling significantly despite great uncertainty in the energy industry, with some experts predicting the price at the bowser may exceed $2.50.
Russia poised to step off default cliff
Russia has until Wednesday this week to make payments on its debts, or risks defaulting once the 30-day grace period expires.
The heavily sanctioned country has flagged its intention to pay ‘unfriendly’ debtors with roubles, a controversial move that has many economists scratching their heads as to what the long-term consequences might be.
“I can say that no longer we think of Russian default as [an] improbable event.” IMF managing director Kristalina Georgieva told US broadcaster CBS (NYSE:CBS) on Sunday.
The global impact is expected to be fairly minor however, as Georgieva told reporter Margaret Brennan, “When you look at the total exposure of banks to Russia, it is about $120 billion. Not negligent, but definitely not systemically relevant.”
Ironically, Russia has some US$630 billion in its war chest but has been barred from accessing large swathes of it by banking freezes in the US, UK, and EU, imposed after Russia’s invasion of Ukraine.
The consequences of a default are also somewhat unclear; generally, debt defaults affect a country’s reputation and borrowing power, making it more difficult to take out loans in the future.
Russia is already significantly isolated from the global community however and becoming more so as it is pushed out of capital markets and international banking infrastructure.
Countries within Russia’s sphere of influence are the most likely to be affected, especially those relying on grain and energy exports from Ukraine and Russia.
Metal prices have been affected, especially nickel, aluminium, and palladium – of which Russia is a major exporter – as Putin threatens to cut off commodity exports.
While a second iron curtain is unlikely to come down any time soon, it is concerning to see Russia withdraw from the global market, as it may limit the effect economic actions will have against the superpower in future – if the country’s economy can survive financial quarantine and a war which is shaping up to be more drawn out and costly than the Kremlin reportedly expected.
IPO flow runs low
2021 was the strongest year for initial public offerings (IPO) listings and volumes in history, with over 2388 deals raising US$453.3 billion globally.
While few expected 2022 to match those numbers, the conflict between Ukraine and Russia has further spooked prospective investors, leading aspiring IPO companies to pause or scrap their floats and limit secondary raisings in a tumultuous global market.
A record 85 IPOs were scrapped in January and February globally, equalling $US11.4 billion in withdrawn offerings, the most in more than ten years.
The trend has continued into March, as companies planning to float at the beginning of this calendar year noted the poor average performance of newly listed companies; the Goldman Sachs (NYSE:GS) Liquid IPO Index is down nearly 60 per cent from its heights in 2021.
“With IPOs being some of the most growth-orientated businesses, they have felt the blowtorch along with other smaller growth-orientated businesses as that market has repriced on the back of much higher inflation and interest rate expectations,” said Ophir Asset Management senior portfolio manager Andrew Mitchell.
“With the pullback in valuations, the IPO window has been closing rapidly as companies shelve plans to come to market.”
With the return of a bear market in the face of volatile geopolitics, it seems the IPO honeymoon is officially over.