Arcline Investment Management-backed Arxis plans to raise roughly $1 billion in an initial public offering that could value the maker of electronic and mechanical components for aerospace and defense at more than $11 billion. Arxis - Arcline’s first portfolio company to file for an IPO - is one of several aerospace and defense companies expected to hit the public markets this year as investors move to capitalize on heightened interest in the sector amid conflicts in the Middle East and Ukraine. Madison Dearborn Partners-backed drone manufacturer Aevex Aerospace, for example, has also filed for an IPO. In January, European defense company Czechoslovak Group, or CSG, went public in Amsterdam at an initial valuation of roughly €25 billion, or around $29.2 billion. Under terms disclosed Wednesday, Arxis would sell more than 37.7 million shares at $25 to $28 apiece, valuing the company at more than $11 billion at the high-end of the range. Arxis estimated the net proceeds from the IPO at about $930 million at the $26.50 midpoint of the range, or roughly $1.07 billion if the underwriters exercise in full an option to buy up to an additional 5.66 million shares.

The SMI advanced 2.5 percent on Wednesday to 13,113 points. All 20 SMI stocks posted gains. The increases across the board were widespread. In the luxury goods segment, Richemont (+7.9%) and Swatch (+5.8%) were in demand. The conflict in the Middle East had disrupted tourist flows, which account for a significant portion of luxury goods sales. Across Europe, cyclical stocks were among the favorites; in Switzerland, ABB and Sika rose by 7.9% and 5.8%, respectively—Holcim and Geberit in the construction sector gained 6.8% and 4.6%, respectively, and in the financial sector, UBS and Partners Group climbed by 4% and 2.4%, respectively. As inflation and, subsequently, interest rate concerns eased, interest-rate-sensitive technology stocks such as Logitech (+2.1%) and VAT (+7.8%) gained ground. Docmorris (+10.3%) outperformed its competitor Redcare Pharmacy (+8,9%). The market thus rewarded the online pharmacy’s profitability targets alongside strong revenue growth.

Europe
European stock markets closed sharply higher on Wednesday after U.S. President Donald Trump suspended U.S. military operations in Iran for two weeks, on the condition that Tehran reopen the Strait of Hormuz. The Stoxx Europe 600 index rose 3.9% on Wednesday to 613.5 points. In Paris, the CAC 40 and the SBF 120 climbed 4.5% and 4.4%, respectively. In Frankfurt, the DAX 40 jumped 5.1%, while the FTSE 100 gained 2.5% in London. CYCLICAL STOCKS: The de-escalation of the conflict in the Middle East triggered a sharp rebound in cyclical stocks. For example, Air France-KLM surged 11.3%, ArcelorMittal soared 12.8%, and OPmobility rallied 9.8%. Meanwhile, Saint-Gobain jumped 7.6%, Safran rose 10.6%, and Société Générale climbed 9.3%. REMY COINTREAU (+5.5%): The spirits manufacturer announced on Wednesday the launch of a transformation plan dubbed “RC Forward,” along with a restructuring of its organization, to improve efficiency and agility. ERAMET (+2.1%): The mining group stated on Wednesday that its major shareholders had confirmed their support for its strategy, following a report in the Financial Times that the Duval family, holder of 37% of the capital, had reportedly mandated Lazard to examine a possible sale of its stake.

United States
Oil prices plunged, stocks rallied, and government bond yields sank after President Trump said he had agreed to a cease-fire with Iran if the Strait of Hormuz reopened. The Dow industrials jumped 1,325 points, or 2.8%, their largest gain since last spring, while the S&P 500 and Nasdaq composite rose to their sixth straight day of gains. Carnival surged 11% and was one of the top-performing stocks in the S&P 500. The cruise operator was leading a rally in travel stocks, which have been burdened by rising fuel costs. Norwegian Cruise Line was up 7.6%, while Royal Caribbean Group advanced 4.3%. Conversely, shares of oil exploration companies were slumping. APA was the biggest decliner in the benchmark index, down 9.8%. Other oil-linked stocks were broadly falling: Exxon Mobil declined 4.7%, Occidental Petroleum fell 5%, Diamondback Energy lost 4.6%, and Devon Energy tumbled 4.1%. Delta Air Lines jumped 3.8%. The carrier reported better-than-expected earnings and revenue in the first quarter as demand remained strong even as surging fuel costs placed pressure on the carrier’s bottom line. Southwest Airlines advanced 6.7%, United Airlines spiked 7.9%, and American Airlines Group rose 5.6% on positive developments in the Middle East. Meta Platforms was up 6.5% after the Facebook and Instagram parent announced a new large language model called Muse Spark. Unlike previous releases, Muse Spark is a closed model that will power Meta’s AI chatbot and related AI features. Nvidia added 2.2%. Shares of the chip maker rallied along with other semiconductor stocks amid receding possibilities of a disruption to the chip supply chain. Memory-chip makers Micron Technology and Sandisk gained 7.7% and 9.9%, respectively.

Asia
Stocks in Asia mostly fell on Thursday. Oil prices rose slightly again on Thursday morning. Brent crude is currently trading at $96.78, a good 2 percent higher than the previous day, when it had dipped to just over $90. In Tokyo, the Topix is down 0.8 percent, while in Seoul, the Kospi slipped 1.9 percent. Here, profits are being taken on the two chip heavyweights Samsung Electronics and SK Hynix, among others; both stocks lost around 3.5 percent each. On the Chinese stock exchanges and in Sydney, losses ranged between 0.1 and 0.7 percent.

Bonds
U.S. government debt yields slipped on bets that lower energy prices could enable the Federal Reserve to cut interest rates late this year after all. The 10-year Treasury note yield dipped 6 basis points to 4.28%.

Analysis
Target price for Straumann: Goldman Sachs downgrades to CHF 95 (100) – Neutral
Target price for Galderma: Goldman Sachs upgrades to CHF 190 (185) – Buy
Target price for Ems-Chemie: Berenberg lifts to CHF 565 (510) – Sell

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