Investors brace for fallout after hedge fund failure would trigger $ 20 billion stock sale

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Investors brace for fallout after hedge fund failure would trigger $ 20 billion stock sale


With a number of banks reportedly exposed to Archegos, investors are on the lookout for signs of contagion

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U.S. stock index futures fell as traders braced for the fallout from forced block trades that shone a record close on Wall Street. European and Asian stocks rose as oil slipped after the ship blocking the Suez Canal was bailed out.

S&P 500 contracts declined along with Nasdaq 100 futures following revelations Archegos Capital Management LLC – Bill Hwang’s family office – was behind a frenzy of block trading $ 20 billion on Friday, selling off Chinese tech giants and US media companies. With a number of banks reportedly exposed to Archegos, investors are on the lookout for signs of contagion.

Pre-market negotiation in New York City suggested pain for actions related to the event. Goldman Sachs Group Inc. and Morgan Stanley fell about 3 percent. Media shares, including ViacomCBS, have also declined. Discovery Inc. made slight progress.

Credit Suisse Group AG fell 15% in Europe. The Stoxx 600 gauge rose for a second day as gains in defensive sectors including food and beverages outpaced losses in cyclical sectors such as banking and travel.

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West Texas Intermediate crude slipped as much as 2.6 percent after the Ever Given bailout in a first step in reopening the Suez Canal to traffic. A gauge of the dollar rose and yields on 10-year US Treasuries slipped. European government bonds posted modest losses.

Investors are focusing on the strength of the vaccine-aided recovery and the risks of inflation. Later this week, US President Joe Biden plans to unveil a new stimulus package with an infrastructure slant. US-China relations are also at the center of concern, after a report that Washington is not ready to lift tariffs on Chinese imports in the near future, but may be open to trade negotiations.

Here are some of the main developments in financial markets:

Stocks

Futures contracts on the S&P 500 index fell 0.4% at 11:08 am London time. The Stoxx Europe 600 index gained 0.3 percent. The MSCI Asia Pacific index rose 0.2%. The MSCI Emerging Markets Index climbed 0.1%.

Basic products

West Texas Intermediate crude fell 0.3 percent to US $ 60.80 a barrel. Brent climbed 0.1 percent to US $ 64.64 a barrel. Gold weakened 0.4 percent to $ 1,724.93 an ounce.

Bloomberg.com

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