SpaceX raises USD75b in record IPO

Good morning. Here’s what happened overnight and what you need to know today.

1.

Liftoff: SpaceX raised USD75 billion ($106.4 billion) in the biggest IPO of all time, selling 555.6 million shares at USD135 each for a fully diluted valuation of about USD1.8 trillion and putting founder Elon Musk on the verge of becoming the world’s first trillionaire. According to Bloomberg, retail investors placed more than USD100 billion in orders, far exceeding the 20% of shares reserved for them, while BlackRock was seen ordering at least USD5 billion. Veteran short-seller James Chanos called it “a hopes-and-dreams IPO” driven by enthusiasm for Musk and AI rather than the fundamentals of a company yet to post a profit. Musk will control 84% of the voting power. Meanwhile, Nasdaq, Citadel Securities and Jane Street have been stress-testing systems for tomorrow’s debut, to avoid a repeat of Facebook’s glitch-marred 2012 debut, sources told Reuters. Meanwhile, US stocks rallied as oil fell after Donald Trump signalled a US-Iran settlement was near. The S&P 500 rose 1.75%, the Nasdaq 100 rose 2.54% and the Philadelphia Stock Exchange Semiconductor Index rose 7.91%. (SpaceX filing)(Reuters)(Bloomberg)(WSJ)

2.

Brink manship: Donald Trump called off new military strikes on Iran, just a few hours after vowing on Truth Social to hit the Islamic Republic “VERY HARD TONIGHT" and threatening to seize Kharg Island, the heart of Iran’s oil economy. The US president said “final points" of an initial peace deal had been approved at “the highest level” of Iranian leadership and that the signing would be announced shortly. But Iran’s semi-official Fars news agency reported Tehran had not approved the text of any agreement, Reuters reported. Brent crude fell nearly 4% to below USD90 a barrel after the announcement. The reversal followed two days of US strikes on southern Iran and Iranian retaliation on US bases in Kuwait, Bahrain and Jordan, which had raised fears the fighting could become impossible to contain. Three Indian crew members were killed in a US strike on the oil tanker Settebello, the first seafarers known to have died in the US blockade enforcement, prompting a diplomatic protest from New Delhi. (Reuters)(Bloomberg)(NYT)(WSJ)(AP)

3.

Line out: More KPMG FairCall clients are reviewing their contracts with the accounting giant, as Greens senator Barbara Pocock called for it to be banned from providing whistleblower hotline services while the audit leaks investigation plays out. Newcastle Greater Mutual Group and Police Bank both told Capital Brief they are reviewing their FairCall contracts, while Western Sydney Airport signalled it could take similar steps and Marinus Link said it was monitoring the situation. Police Bank chief executive Greg McKenna also said they were “revaluating our relationship with KPMG FairCall.” Pocock said KPMG, which by its own admission failed to appropriately deal with its own whistleblower, “must be banned from all whistleblower hotline services until all investigations — and any remedies — are known”. Meanwhile, the AFR reported Westpac director Peter Nash sat in on meetings when KPMG, EY and Deloitte pitched for the bank’s $32 million a year audit, despite Westpac’s assurances to a parliamentary committee that the former KPMG chairman was “not involved” in the tender. Nash also stayed at the house of KPMG chairman Martin Sheppard during the audit pitch, the paper said citing three current and former big four consulting firm personnel who spoke on the condition of anonymity. (Capital Brief)(AFR)

4.

Hike club: The European Central Bank raised its deposit rate to 2.25% from 2% for the first time in almost three years in the first policy response by a major central bank to the Iran war’s energy price shock. President Christine Lagarde told reporters in Frankfurt the shock is starting to broaden “throughout the economy, with direct costs being obvious, with indirect costs also showing up”. “The main risk would be not to take that kind of decision,” Lagarde said referring to the unanimous decision. The ECB raised its 2026 inflation projection to 3.0% from 2.6% and to 2.3% from 2.0% in 2027, while cutting 2026 growth to 0.8%. Unnamed sources at the meeting told Reuters a pause at its ECB’s 22 July meeting was more likely than a hike, provided there is no sudden and large swing in energy prices, with one source saying Brent crude above USD100 a barrel could trigger a July rise. It comes as the US Fed and the Bank of England are expected to hold rates next week, while the Bank of Japan is expected to hike. (ECB)(Bloomberg)(Reuters)(NYT)

5.

Space race: TPG Telecom stands alone among the big telcos in pushing to end the industry’s standoff with Elon Musk’s SpaceX subsidiary Starlink over two contested spectrum licences for satellite-based mobile services. TPG chief technology officer Giovanni Chiarelli suggested Starlink be given the spectrum “at very low or even zero cost”, provided it supplied services on an equitable wholesale basis to all mobile operators and met defined reliability and coverage standards. That was a shift from the telcos’ united call for a competitive allocation. A Telstra spokesperson told Capital Brief “Australia’s approach should encourage competition and give telcos flexibility and choice of LEO sat providers over time.” Optus pointed to its Senate submission arguing the licences must be held by mobile network operators Telstra, Optus or TPG. The licences are sharply contested because satellite-based mobile coverage is considered essential to the universal outdoor mobile obligation the government hopes to impose on telcos. It comes after telco regulator ACMA scrapped plans for an auction this year and is still deciding how to allocate the licences. (Capital Brief)

6.

Arms length: UK defence secretary John Healey quit, accusing Prime Minister Keir Starmer of being unable, and the Treasury unwilling, to commit the resources needed to keep the country safe at a time of rising threats. In his resignation letter, Healey said the government’s Defence Investment Plan fell “well short of what is required for defence and the country at this dangerous time.” Healey said the plan presented to him on Monday would lift defence spending to just 2.68% of GDP in 2030, after reaching 2.6% next year, whereas he wanted a commitment to 3% by 2030. Starmer responded that he was sorry to see Healey go but insisted the plan would deliver an unprecedented increase in defence spending. The resignation deals another blow to Starmer, who is expected to face a leadership challenge if Greater Manchester mayor Andy Burnham wins the 18 June Makerfield by-election, the FT reported. Armed forces minister Al Carns also threatened to resign unless the funding settlement for defence was increased, the FT reported. (FT)(Reuters)(AP)

7.

US wholesale: US producer prices rose 1.1% in May, the Bureau of Labor Statistics said, which was above expectations of a 0.7% gain and pushing annual wholesale inflation to 6.5%, its fastest pace since November 2022. The Iran war drove energy costs 10.7% higher, with gasoline surging 23.4%. A 2.8% rise in goods prices accounted for nearly 80% of the increase, the bureau said. Goods prices excluding food and energy rose 0.8%, the largest monthly gain since April 2022, according to Reuters. The data, alongside the previous day’s report showing consumer inflation above 4% for the first time in three years, is likely to back calls for the US Fed to raise rates in 2026. “The Fed is clearly missing its inflation target by a lot more than it is missing its employment objective,” said John Ryding, chief economic adviser at Brean Capital. “The PPI report should further embolden those on the FOMC who think a rate hike might be needed later in the year.” Still, the Fed is still expected to hold its benchmark rate at 3.50%-3.75% next Wednesday (Thursday AEST). (BLS)(Reuters)(Bloomberg)(WSJ)

8.

Growth warning: The World Bank cut its 2026 global growth forecast to 2.5%, the weakest since the Covid-19 pandemic, and said two-thirds of economies have seen prospects deteriorate as the Iran war disrupts commodity flows. “This is the biggest supply shock in more than 50 years,” World Bank chief economist Indermit Gill said, warning food prices would be affected next if the conflict persists. It said it was making up to USD60 billion in credit available to weaker economies, scalable to USD80-100 billion over 15 months. The bank’s baseline assumes Brent crude averaging USD94 a barrel this year and the worst energy supply disruptions abating by the end of July, with global inflation seen at 4%. Growth could slow to 2.1% if oil averaged USD115, and to 1.3% if the energy shock spread to financial markets. The bank slashed its forecast for the Middle East, North Africa, Afghanistan and Pakistan by 2.7 percentage points to 1.6%. Separately, the World Bank warned possible El Niño conditions could push food prices above current expectations. (World Bank)(Bloomberg)(Reuters)(WSJ)(FT)