AI Market Euphoria and IPO Trends

Good morning from the Financial Times. Today is Monday, june fifteenth, and this is your FT newews briefing. The U.S. and Iran say they've reached a deal to reopen the Strait of Cormuz and extend a ceasefire Just as President Trump heads to France for the annual G seven summit Plus, what does SpaceX's blockbuster stock market debut tell us about an imminent wave of tech IPOs So it is a great barometer of the interest and euphoria that we're seeing around AI I'm Victoria Craig and here's the news you need to start your day Global oil prices slid four percent to about eighty four dollars a barrel at the start of trade today. The drop comes after the U.S and Iran say they've finalized a deal to extend their ceasefire and reopen the Strait of Hormuz. Both sides are expected to meet in Switzerland on Friday to officially sign the truce. President Trump said the deal would allow the vital waterway to reopen without any tolls. He also pledged that the US would remove its naval blockade on Iranian ports immediately. If the agreement is implemented, it could allow far more oil to transit through the shipping lane than the trickle that's currently getting through. Ultimately, that would help ease a global supply crunch Before the war, nearly a fifth of the world's daily crude supplies through the straight. Aside from negotiations with Tehran, diplomatic efforts of another kind are on Trump's agenda this week. He'll join the leaders of France, the UK, Germany, Japan, Italy, and Canada in the French resort town of Evienne Le Bin for the annual G seven summit Kicks off today Our Paris Bureau Chief Lyla Abud is there and joins me to talk about what we can expect from the three day meeting. Hi, Laya Hello This is the first G seven gathering since the US, along with Israel launched the war against Iran back in February. How long of a shadow is that conflict likely going to cast over this gathering A very big one because the French already kind of tore up the schedule to make it much more kind of about the war in the Middle East, the economic consequences And that's going to take up almost a whole day really. And then there will be a separate session on Ukraine because Volodymyr Zelensky will be here. And then the kind of what they thought they were going to talk about has basically been compressed into like a couple of hours, half a day. So both the wars will be on the menu Do you have any details about what the discussions are likely to center on Well, on the Iran war because apparently now there are two that we have to distinguish between Trump has said it's on his schedule that he's going have bilateral meetings with the leaders of Egypt, Qatar, and the United Arab Emirates which is interesting, just because those are kind of the key countries in the region who haveve been playing a role either in mediating or directly affected by the conflict So it would be very interesting to see what comes out of those? would that be kind of a separate way that messages could be passed between the parties that' separate from the negotiations that were happening kind of at a lower level and mediated by Pakistan We definitely don't know the answers to this. And I think there will be an element of winning it at the summit because a temporary peace deal between the U. S. and Iran that will obviously overshadow anything else that was going to happen here Okay, so that's sort of like the big picture. When it comes to some of the individual relationships here, France's presresident Emmanuel Macron, of course, is hosting this year's summit His relationship with President Trump has changed fairly dramatically over the last decade or so that the two have been in power. What is the dynamic likely to be between those two leaders this week I actually find their relationship fascinating and it kind of has gone through several tumultuous phases and you're never totally sure which one is going to show up on a given day Mac Home is the leader in Europe who's been in office the longest. So he was you a very young president bright and shiny when Trump was in his first term So he has a direct line of communication with Trump that actually can be somewhat productive can sometimes backfire becausecause again arguments and Trump posts his private messages his text sometimes on Twitter. There is a relationship there, which is a diplomatic channel. and Macon also has very developed ideas on what Europe should do, Europe being a stronger player, not just being kind of secondary to the US and China. And he's sort of the voice of those issues I mean even in the first term, M home actually hosted a separate G seven in Baritz during Trump's first term And back then, if you look at the news stories, it was all about trade wars, right? So it's a little bit of a broken record sort of between them. But if I had to guess, they will be putting on the Bomad's face during the summit And we'll see if anything else breaks out That's maybe less nice. And you mentioned Europe. It seems like it has really started to try to stand more on its own sort of without U. S. support since Trump took office again last year. Are we likely to see that more fractured relationship on full display this week? or do you think Trump will just try to play nice with European leaders I think if I knew it was in Trump's brain, would a lot of people are trying to guess what's in Trump's brain. If I had to say from the European side, they're not going to light things on fire. They're going to be in at least in public and probably also in private trying to be constructive with the US. The economic fallout of the Iran War in Europe is pretty severe. So I mean, the Europeans have a skin in the game. They want this war to end as soon as possible for their own interests So yeah, I don't foresee that the Europeans collectively are going to have a huge spine and do something bold against Trump now The relationship is definitely deteriorated even if there's a lot of brave faces on Sounds like an interesting week ahead for you. there in Evon Le Bin. Lela Abud, the FTs Harris Bureau Chief. Thanks so much for your time. Thank you U. S. investors cannot get enough of AI. In the span of just a few days, they've shelled out more than one hundred billion dollars for deals including SpaceX's IPO, the biggest of all time, as well as debt financing for anthropic. The enthusiasm to put cash to work comes despite anxieties about global growth and the war in Iran ur U S. investment editor joins me now to chat about all of this. Hi Eric H So SpaceX shares soared nearly twenty percent in their stock market debut on Friday. That flotation made founder Elon Musk a trillionaire What does this tell us about what we can expect from other highly anticipated offerings coming down the pike So it is a great barometer of the interest and euphoria that we're seeing around AI. and every derivative around artificial intelligence, because that's effectively what SpaceX is a bet on. It's a bet on XAI and how quickly compomanies and people will spend money for AI tools. and we have two other massive AI companies in the wings that have already filed to go public. This is anthropic and open AI. And so The really strong reception from retail investors as well as really large institutions indicates that fervent demand remains there And I should say, it comes in a week when we saw a thirty five billion dollarsar debt financing, phanthropic secured when we talked to People on the debt side, they are incredibly active. to fund the data center buildout and all the infrastructure needed for this. And so you can really see miswilling for investors to dig into their pockets. to fund this buildout I think this is all really interesting because there's a lot going on in the world right now, and we'll get to geopolitics in a second. As we saw with SpaceX, clearly the equity market is booming, but not every part of the market is booming. Where are we still seeing maybe some pessimism or not as much optimism Yeah, I think when we spoke to bankers for a story that we wrote over the weekend One of the themes that you saw really apparent was that while there is so much attension on AI and really a willingness to fund Andy of it, as one banker said, it's not a question of if AI will be adopted. These companies are already generating tens of billions of dollars of revenues, which is very different from the dot com boom and bust The question is does it broaden up beyond that will O companies that have been sidelined for IPOs, which haven't been able to achieve the valuations private equity backers have wanted, for instance A they able to list and float their shares And so People are really keen to see it as this little shot to equity markets and broghten out a rally The flip side to this though is A lot of enterprise technology companies face disruption from AI are really struggling. and those were Hey. huge portion of private equity buyouts over the last five years And so there's a question Can they list any of these companies or do they struggle with those exits still? And so that's what people are watching for I mentioned the geopolitical tensions. Investors still seem very optimistic despite those tensions in the Middle East, especially between the U.S. and Iran. Could geopolitics derail some of this enthusiasm, some of this froth maybe that we're seeing in US markets Yes, one banker I spoke to said they are advising clients. like if you're debating going go now, finance yourself because you don't know if markets will turn. Maybe actually one of the thing I would add is People often look at How much equity issuance there is in any given year, right how many times are companies selling more stock than they're buying back And occasionally that's a sign of a market top And you're seeing better right now Oh gosh, don't open up the door to is this the market peak? Eric Platt, the US investment editor for the FT. Thanks so much for your time. Thank you so much. Before we go New York, go, New York, go, the Kicks have returned to the Epire state as champions They won their first NBA title in more than half a century late Saturday night in San Antonio, Texas, and will star in a ticker tape parade this Thursday. It's a story that's captured even the most hardened hearts and turned this city into a sea of blue and orange Basketball fever has been good for retailers who have capitalized on the euphoria with Nick themed food and merch But the excitement has been good for investors too. Shares in Madison Square Garden Sports, which owns the Nicks and other teams, have doubled over the last year And hey, speaking of New York, a quick reminder that our inaugural FT weekend festival here in the Big Apple is this Saturday. You can register now as a podcast listener and save ten percent with the code FT podcast. We've got a link to sign up for the event in our show notes, along with all of the free to read links to the stories in today's podcast. This has been your daily FT news briefing. Check back tomorrow for the latest, Business newews.