Rocket Lab rallies on US$8b cash-and-share deal to buy Iridium

Rocket Lab clawed back some of its recent losses after unveiling an US$8 billion cash-and-share deal to buy satellite communications firm Iridium Communications in its first foray into space services.

The deal was in a broadly positive day for Wall Street as tech majors bounced back after the recent jitters over the pace of artificial intelligence investment, with Google’s parent Alphabet gaining after its inclusion into the Dow Jones Industrial Average – the fifth of the Magnificent 7 megacap stocks to join the blue chip index.

Meanwhile, the US Supreme Court rejected President Donald Trump’s bid to remove Federal Reserve governor Lisa Cook, saying the central bank’s independence would be at stake if a president could fire governors at will.

And the Financial Markets Authority’s annual financial conduct report has set out the regulator’s priorities for the coming year, with adviser commissions back in its sights, along with making sure lenders and insurers are designing new products that treat customers fairly, ensuring complaints lead to service improvements, and weeding out fraud.

Take me to the moon

Rocket Lab jumped 15% to US$97.35 in late trading after the favourite among New Zealand investors said it’s agreed to buy satellite firm Iridium, giving the company a foothold in space applications as it chases market leader SpaceX, which was up 6.1%. Iridium jumped 25% on news of the deal.

Stocks on Wall Street were broadly stronger, with the S&P 500 climbing 1.1% in late trading as tech companies recovered from the recent selling pressure amid fears over the pace of AI spending. The tech-heavy Nasdaq Composite jumped 2%, while the Dow was up 0.7%, led by Alphabet in its first day on the blue-chip index.

Verizon Communications dropped 5.5% after leaving the Dow, and announcing a new joint venture with the UK’s BT Group for their international businesses.

Meanwhile, Comcast climbed 6.3% after pressing ahead with plans to split its communications and media arms into separate businesses.

Gains were widespread across financial stocks such as JPMorgan Chase, drugmakers and automakers, along with semiconductor and internet firms.

Strategic tilt

Crypto treasury firm Strategy surged 12%, unwinding some of its recent losses, after the company said it would sell Bitcoin and buy back shares to shore up investor confidence. Bitcoin increased 1.3% to US$60,195 at 7am in Auckland.

Across the Atlantic, stock markets were softer, with the UK’s FTSE 100, Germany’s DAX and France’s CAC 40 all down 0.2%.

Brent crude oil prices rose 1.6% to US$73.77 a barrel as investors remain nervous about the fragile peace in the Middle East, with the US and Iran agreeing to halt their flurry of strikes and resume talks later this week.

Meanwhile, the US Supreme Court rejected the president’s bid to fire Fed governor Cook in a split decision, saying letting him fire policymakers at will undermined the central bank’s independence. In a separate decision, the Supreme Court affirmed the president’s right to sack a member of the Federal Trade Commission.

The yield on US 10-year treasuries fell 1 basis point to 4.38%, while the kiwi dollar traded at 56.53 US cents at 7am from 56.44 cents yesterday. The New Zealand dollar rose to 91.56 yen from 91.33 yen, with Japan’s currency hitting a 40-year low against the greenback, keeping markets wary of potential intervention.

“For New Zealand investors, sentiment has improved as geopolitical concerns in the Middle East continue to ease, allowing markets to refocus on economic fundamentals and corporate earnings,” Moomoo market strategy consultant Greg Boland said in a note. “Falling volatility, a renewed rally in AI-related stocks and stronger global equity markets provide a supportive backdrop heading into the new quarter.”

Boland said volatility would probably pick up next week with upcoming US jobs data likely to shape expectations for the Fed’s rate track.

Australian futures are pointing to a 0.1% gain for the S&P/ASX 200 index when trading opens across the Tasman. New Zealand’s S&P/NZX 50 index is on track for a 4.9% gain this quarter.

Local data today include ANZ’s monthly business confidence survey, which will be closely watched ahead of the Reserve Bank’s policy decision next week, which is dividing economists on whether policymakers will hike the 2.25% official cash rate or wait until September.

Logistics firms such as Mainfreight and Port of Tauranga will be in view after shipping giant Maersk upgraded its guidance for the year on increased container growth.

Meanwhile, Serko and Investore Property hold their annual meetings today.

Reporting by Paul McBeth. Image from NASA on Unsplash.