A Reuters Open Interest newsletter

Making sense of the forces driving global markets

By Jamie McGeever, Markets Columnist 

Oil prices jumped and Wall Street fell on Thursday, with the Nasdaq having its worst day in a month, as fading hopes of a U.S.-Iran peace deal soured recent optimism around the U.S. earnings season and tech companies in particular.  

In my column today, I look at the resilience of U.S. equity - and other global stock markets - and ask whether the biggest investment risk right now might not be war, inflation or tariffs, but risk aversion and not being invested.

If you have more time to read, here are a few articles I recommend to help you make sense of what happened in markets today.

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* Private market blues

The opaque world of private markets is in the spotlight again after the Reuters exclusive on Wednesday that private equity firm Thoma Bravo is nearing a deal to hand software firm Medallia over to its lenders. This will result in a $5.1 billion equity writedown for Thoma Bravo and its co-investors.

Medallia's main lenders? Private credit giants Blackstone, KKR and Apollo, whose shares all underperformed on Thursday. Blackstone CEO Stephen Schwarzman came out swinging in defense of private credit, but shares fall 5.7%, their worst day in two months. 

* IPO, IPO, it's off to work we go

Excitement is building ahead of SpaceX's stock market listing, expected in June, with OpenAI and Anthropic set to follow not long after. Together, this will be the largest wave of initial public offerings in history - pretty remarkable for three reportedly loss-making companies.

Of course, investors will be buying in for future earnings, and that's what the combined IPOs worth $3 trillion, according to LPL Financial estimates, will reflect. Investor appetite for high‑growth technologies is palpable, but $3 trillion is, well, a lot.  

* Safe haven, where art thou?

With the Iran war about to enter its third month and the global energy shock still very much alive, the strength of U.S. and many other equity markets is remarkable. Yet surely there is some demand for safety, hedging or diversification amid such uncertainty, right?

It doesn't look like it. Traditional havens like Treasuries, gold and the yen are all down since the war started, and the dollar is barely up at all. Bitcoin is up 18%, but it did fall 50% in the five months preceding the war. Is Big Tech taking on a 'safe haven' mantle now too?

The biggest investment risk right now? Risk aversion

In a swirling world of heightened uncertainty, investors could be forgiven for hunkering down and minimizing exposure to proliferating risks. Yet paradoxically, the biggest risk may be risk aversion itself.

With the Iran war set to enter its third month, the largest global energy shock in decades is stifling growth, stoking inflation, and confounding policymakers. And that's on top of the new world order – marked by de-globalization, de-dollarisation, and trade wars – that investors were trying to make sense of before the war started on February 28. 

All good reasons to reduce exposure to risk assets like equities and adopt a more defensive posture, right? Not really.