Stocks, Futures Dip, Wary of Archegos Fallout: Markets Wrap

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(Bloomberg) — Asia stocks fluctuated and Treasury yields climbed as investors weighed rapid progress in the U.S. vaccine rollout against the risk of further blow-back from the implosion of Archegos Capital Management.

Shares rose in China and Hong Kong while Japan’s index fell, led by banks. Nomura Holdings Inc. said it’s too soon to estimate the impact of losses tied to a U.S. client, identified by Bloomberg as Bill Hwang, head of the troubled investment firm. U.S. futures edged down as traders assessed broader Wall Street exposures. Earlier, the S&P 500 Index lifted off lows on President Joe Biden’s announcement that 90% of adults will be eligible for the Covid-19 vaccine next month.

Ten-year Treasury yields rose to 1.74%, and the five-year hit its highest point in a year. The dollar held steady.

© Bloomberg U.S. dollar heads for best quarter in a year amid reopenings

“It’s never better when you are a shark in the water to be buying from a forced sellers,” Shana Sissel, Spotlight Asset Group chief investment officer, told Bloomberg TV, who is skeptical of the potential for broader market fallout from Archegos. “I find it hard to believe that this would have a systemic massive impact on global markets beyond the few positions that they held.”

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Ripples are barely detectable in credit markets so far, though traders are demanding higher rates to hedge potential losses on the debt of banks caught up in the Archegos situation, including Nomura and Credit Suisse Group AG. Archegos said that “all plans were being discussed.”

Investors have been focusing on the strength of the recovery and inflation risks as governments step up spending to spur growth. Later this week, the U.S. president plans to unveil a further stimulus program with a tilt toward infrastructure. Positive news on vaccines is helping risk appetite, with a real-world study from Pfizer Inc. and Moderna Inc. showing their doses effectively prevented coronavirus infections, U.S. government researchers said.

Read: Archegos Drama Hardly Ruffles a Market That’s ‘Drunk on Risk’

Oil fluctuated as traders looked to this week’s OPEC+ meeting, with speculation that renewed demand concerns will push the group to keep production in check. Meanwhile, the Suez Canal reopened to traffic after the container ship blocking it was tugged free.

Video: Wall Street points to a lower open after Friday’s late-day bounce (CNBC)

Wall Street points to a lower open after Friday’s late-day bounce
What to watch next

Some key events to watch this week:

President Biden is expected to unveil his infrastructure program Wednesday.EIA crude inventory report Wednesday.OPEC+ meets to discuss production levels for May on Thursday.China Caixin PMI due Thursday.U.S. employment report for March on Friday.Good Friday starts the Easter weekend in countries including the U.S., U.K., France, Germany, Australia and Canada.

Stocks

S&P 500 futures dipped 0.1% as of 11:50 a.m. in Tokyo. The S&P 500 Index declined 0.1%.Topix Index fell 1.1%.Australia’s S&P/ASX 200 Index fell 0.5%.South Korea’s Kospi Index rose 0.6%.Hang Seng Index rose 1.1%.Shanghai Composite Index rose 0.5%.

Currencies

The yen traded down 0.2% at 109.97 per dollar, around the weakest in a year.The offshore yuan was at 6.5744 per dollar.The Bloomberg Dollar Spot Index was steady.The euro was at $1.1766.

Bonds

The yield on 10-year Treasuries increased three basis points to 1.74%.Australia’s 10-year bond yield rose nine basis points to 1.78%.

Commodities

West Texas Intermediate crude was steady around $61.55 a barrel.Gold was down 0.4% at $1,704.90 an ounce.

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