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Stocks climb as investors look past U.S. hedge fund default

Economy Mar 30, 2021 05:20AM ET
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© Reuters. FILE PHOTO: A man stands on an overpass with an electronic board showing Shanghai and Shenzhen stock indexes in Shanghai

By Ritvik Carvalho

LONDON (Reuters) - Global stock markets rose on Tuesday as investors shook off worries about a hedge fund default that hit international banking stocks overnight and remained focused on the global COVID-19 vaccination programme.

European stocks opened higher with the regional STOXX 600 index up 0.5%. Britain's FTSE 100 rose 0.6%, Germany's DAX and Italy's FTSE MIB rose 0.5% each, and France's CAC 40 rose 1%. (EU)

MSCI's All Country World Index, which tracks stocks across 49 countries, traded flat.

S&P 500 stock futures were off 0.1%. (N)

Sentiment in Asia was mixed early, then turned positive, with most of the region's major markets trading higher.

Nomura and Credit Suisse (SIX:CSGN) are facing billions of dollars in losses and regulatory scrutiny after a U.S. investment firm, named by sources as Archegos Capital, defaulted on equity derivative bets, putting investors on edge about who else might be exposed.

Nomura shares were down a further 1.1% Tuesday after dropping as much as 16% on Monday, when it revealed it could take a $2 billion loss from the hedge fund fallout.

"From a market perspective with contagion looking limited ... despite the news flow of further forced liquidations and prime brokerage losses, this looks at this stage to be a positioning- driven sell-off in U.S. futures and various single stock names," said Eleanor Creagh, market strategist at Saxo Bank.

Creagh added that further forced deleveraging was still a risk if prime brokers tighten margin requirements.

MSCI's broadest index of Asia-Pacific shares outside Japan was 0.6% higher. Mainland China's CSI300 index rose 1%.

Hong Kong's Hang Seng Index gained 1.2% to reach 28,668, driven up by a rebound in the city's tech stock index. That index has been under pressure from concern over the Chinese government's move to increase regulation of those companies.

Japan's Nikkei was flat, dragged down by Nomura's share price weakness. Australia sounded a weaker tone when the S&P/ASX200 closed down 0.9% at its lowest point for a week.

Credit Suisse's Asia Pacific senior investment strategist Jack Siu said the prospect of Asian travel bubbles had sparked enthusiasm among some investors in the region.

"Tourism-dependent Asian economies will benefit," he said.

Hong Kong's commerce secretary, Edward Yau, flagged Monday the government had restarted talks with Singapore to re-establish a potential travel bubble between the cities.

Investor sentiment was still closely tied to the pace of the global vaccine rollout, said Citigroup (NYSE:C) equity derivative solutions director Elizabeth Tian.

"Investors will also be watching the number of COVID cases as rises in Western Europe and the Philippines sees the return of renewed restrictions, while vaccination attempts threaten to stall amidst supply constraints and vaccine nationalism," Tian said.

"While restrictions are increased in Europe, the UK will be relaxing stay-at-home rules," she added.

Wall Street on Monday pared early losses driven by the banking sector on fears that issues from the downfall of Archegos could spread throughout the banking sector.

The Dow Jones Industrial Average rose 0.3%, the S&P 500 lost 0.09% and the Nasdaq Composite dropped 0.6%.

Benchmark U.S. 10-year yields hit 1.7760%, their highest since January 2020.

In currencies, the dollar rose to its highest in a year against the yen, boosted by the spike in Treasury yields. The euro fell to $1.1751 against the dollar for the first time since Nov. 11. [FRX/]

Oil prices fell as the Suez Canal opened up after days closed by a grounded supercarrier and focus turned to an OPEC+ meeting this week where the extension of supply curbs may be on the table amid new coronavirus pandemic lockdowns. [O/R]

Stocks climb as investors look past U.S. hedge fund default
 

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Comments (4)
James Pattison
James Pattison Mar 30, 2021 1:31AM ET
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Biden doesnt know anything... buy bitcoin and cardano to protect yourself
Johnny Crash
Johnny Crash Mar 30, 2021 12:37AM ET
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Don't worry about banks, the taxpayers will foot the bill and bail them out
Joel Schwartz
Joel Schwartz Mar 30, 2021 12:37AM ET
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The heck we will
Gamer Turtle
GamerTurtle Mar 30, 2021 12:37AM ET
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we always will. it is taxpayers money but decision on how it will be spend lies with friends of banks.
perplexed76 .
perplexed76 . Mar 29, 2021 11:11PM ET
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the hedge fund too big to fall, power powell will save them
Steve Lora
Steve Lora Mar 29, 2021 7:25PM ET
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Why is there so much black on Asian crime in USA. Black ppl can't be bigots
Jokers R Us
Jokers R Us Mar 29, 2021 7:25PM ET
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black people are the most racist
Modern Matrix
Modern Matrix Mar 29, 2021 7:25PM ET
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Jokers R Us yea. ok trump
AmericaIsKing oftheGalaxy
AmericaIsKing oftheGalaxy Mar 29, 2021 7:25PM ET
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Your real name is "Lee Wong" isn't it?
Gerald Zhang
Gerald Zhang Mar 29, 2021 7:25PM ET
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only BLM
Jesse James
Jesse James Mar 29, 2021 7:25PM ET
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Black men commit 85% percent of crime in the US. How do you starve a Black guy- hide his food stamps in his work boots.
 
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