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Shares hold up as economic optimism offsets Archegos fallout

Economy Mar 29, 2021 10:37AM ET
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2/2 © Reuters. First trading day of stock market in Tokyo 2/2

By Danilo Masoni and Wayne Cole

MILAN (Reuters) - World shares held up on Monday as optimism about the economic recovery and hopes that the Suez Canal could be reopened soon offset uncertainty related to the default of a U.S. hedge fund.

Investors were on edge about who had been caught out in the default of the fund, named by sources as Archegos Capital, after Nomura and Credit Suisse (SIX:CSGN) warned of big losses and block trades on Friday hit some U.S. and Chinese stocks.

The partial re-floating of the huge container ship blocking the Suez Canal for nearly a week however raised hopes that the vital waterway could reopen soon and ease global shipping backlogs.

Investors were also looking to President Joe Biden to outline this week his infrastructure spending plan, which could supercharge an already accelerating U.S. recovery.

"There is plenty of U.S. fiscal stimulus in supply and therefore growth in the coming quarters is going to be very good," said Giuseppe Sersale, fund manager at Anthilia in Milan.

"I don't see Archegos posing a systemic threat at the moment and don't think its default will represent a watershed between a bull and a bear market," he added.

The MSCI world equity index, which tracks shares in 49 countries, rose 0.1% by 1205 GMT.

After a mixed performance in Asia, shares in Europe turned higher and were last up 0.3%, while U.S. futures dipped slightly although they came off earlier lows. Nasdaq futures fell 0.1% and S&P 500 futures fell 0.4%.

U.S. and euro zone volatility gauges picked up from last week's lows.

Credit Suisse shares were set for their worst day in one year, down 14%, while Nomura fell 16% in its largest drop on record, limiting gains for Japanese shares.

Barclays (LON:BARC) economist Christian Keller in London said he expected large U.S. fiscal stimulus to expand "robustly" at 6.4% with positive spillovers for the rest of the world.

"Rising inflation over the coming months should be transitory, and core central banks seem committed to looking through it," he said.

The prospect of faster U.S. economic growth has spurred speculation of rising inflation and weighed on Treasury prices.

Yields on U.S. 10-year notes eased a touch to 1.646%, but were not far from the recent 13-month top of 1.754%.

European yields have been restrained by active buying from the European Central Bank, widening the dollar's yield advantage over the euro. The single currency was last down 0.1% at $1.177, just above a five-month low hit last week.

The dollar index was little changed at 92.769, after reaching its highest since mid-November last week.

The lift in yields has weighed on gold, which offers no fixed return. Spot gold was down 0.4% at $1,724 an ounce.

Oil reversed earlier losses on expectations that the OPEC+ group of leading producers will keep output unchanged when it meets this week.

Investors also bet that operations in the Suez Canal might take weeks to return to normal even though a ship blocking it has been partly refloated.

Brent were up 0.8% to $65.09 a barrel, while U.S. crude added 0.7% to $61.38 per barrel.

Shares hold up as economic optimism offsets Archegos fallout
 

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Comments (7)
Kelly Mayer
Kelly Mayer Mar 29, 2021 10:13PM ET
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They want to lockdown the US again. Get ready. Total market rigging.
Dave Jones
Dave Jones Mar 29, 2021 5:34PM ET
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Hope and optimism in the same paragraph!
Jacob Steinschlag
Jacob Steinschlag Mar 29, 2021 5:56AM ET
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Why would investors be worried about hedge fund forced to liquidate? only a liquidated hedge fund is a good hedge fund.
Dave Jones
Dave Jones Mar 29, 2021 1:36AM ET
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more QE and stimulus = more share buybacks and higher stock prices we get it
John Thompson
John Thompson Mar 29, 2021 1:36AM ET
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more capital gains tax to balance the books so fed/gov doesnt default if markets fall ..is that a ponzi scheme or what!
AmericaIsKing oftheGalaxy
AmericaIsKing oftheGalaxy Mar 29, 2021 12:01AM ET
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If companies would trickle down the system would work. Instead they fill their personal treasuries and the treasuries through cronyism and nepotism suppressing the wages of most their workers for sometimes decades. Because they do not honor the system American is forced to retrieve subsidies through other means. Sad, really, the system is great in theory but CEOs, committees, they are far too greedy.
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Kaveh Sun
Kaveh Sun Mar 29, 2021 12:01AM ET
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U just talk c/r/ap. Start ur own busineses, But no, just talk #. There r so many oppotunities here for all to start their own business n free themselves from this modern slavery.
AmericaIsKing oftheGalaxy
AmericaIsKing oftheGalaxy Mar 29, 2021 12:01AM ET
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Kaveh Sun so anyone who wants a livable wage has to start a business? Then who will do the work? And 90% of businesses fail
Klaus Weyers
Klaus Weyers Mar 29, 2021 12:01AM ET
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there is no such thing as livable wage.. let the market set the wage rate.. and if you dont like it, start your own biz and compete
John Thompson
John Thompson Mar 29, 2021 12:01AM ET
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good one! every ones been brainwashed like sheep to feed the greedy bloated whales! have you ever asked yrself why the lower class middle class work three jobs a day to pay their monthly bills when cpi is 2% and cost of living is 10%. So been like thats since they adjusted cpi from the 80s .. the fed gov and ceos will defend this till they die because if tru inflation were measured they would all default and the great USA scheme would be tatters
Kevin McCarthy
Kevin McCarthy Mar 29, 2021 12:01AM ET
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you need a complete economic reset to do that. too many people controlling resources they have no right to. too much federal dollars sunk into buisness the FED deem worthy. If the FED hadn't been picking who can and cannot succeed, your idea would be the best viable solution.
Todd Gray
Todd Gray Mar 28, 2021 10:07PM ET
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the liberals just dittle the middleclass. all their aid ruins everything. the unintended consequences of scientific intervention makes everything worse. imo, covid has been overhyped to hide their long term greed. did you know in the 4 years proceeding covid, about 5500 americans died every single day of the top 8 underlying conditions. that's right on the CDC's website.
Alejandro Pieroni
Alejandro Pieroni Mar 28, 2021 10:07PM ET
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Stop using meth, it is bad for you
Fabio falec
falec Mar 28, 2021 10:07PM ET
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I couldn't find the numbers you mentioned, but even if they are true, just in Feb you had 4k people dieing daily for COVID. Isn't this comparable with the sum of all 8 worst underlying conditions in US, hence still very concerning? I have a friend with same mindset, last week her dad and grandma died for COVID, now she thinks different.
Matt Kay
Matt Kay Mar 28, 2021 10:07PM ET
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This is a russian bot. Block, report and forget
Steve Lora
Steve Lora Mar 28, 2021 8:56PM ET
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Infrastructure cash will go back to unions and Democrat party just like Obama's Trillion dollar Shovel Ready Jobs that never happened
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Dave Jones
Dave Jones Mar 28, 2021 8:56PM ET
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AmericaIsKing oftheGalaxy I don't remember that
divad mocihc
9divaD Mar 28, 2021 8:56PM ET
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Think Solyndra ... or pay someone to dig a hole in the morning and pay someone else to refill it at night ... with the same soil, Shovel Ready
danny Levine
danny Levine Mar 28, 2021 8:56PM ET
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AmericaIsKing oftheGalaxy you don't even believe that, do you?
perplexed76 .
perplexed76 . Mar 28, 2021 8:56PM ET
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it will go to financial markets "infrastructure"
Jokers R Us
Jokers R Us Mar 28, 2021 8:56PM ET
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don't forget the mob.
 
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