EconomyMarkets

Futures slip as bank stocks fall on hedge fund default concerns By Reuters

2/2
© Reuters. FILE PHOTO: People are seen on Wall St. outside the NYSE in New York

2/2

By Devik Jain

(Reuters) – U.S. stock index futures dropped on Monday after Wall Street’s surge in the prior session as major lenders came under pressure on concerns over possible spillover effects of a hedge fund’s default on margin calls.

Nomura and Credit Suisse (SIX:) warned of significant losses after the U.S. hedge fund, named by sources as Archegos Capital, defaulted, hitting shares in some big U.S. media and Chinese tech companies.

The news has sparked fears that other lenders could be in the process of exiting these positions too.

Shares in Bank of America Corp (NYSE:), Citigroup Inc (NYSE:), JPMorgan Chase & Co (NYSE:), Goldman Sachs (NYSE:), Wells Fargo (NYSE:) & Co and Morgan Stanley (NYSE:) dropped between 0.8% and 3.3% in premarket trading.

Shares in Discovery (NASDAQ:) Inc rose about 5% after tumbling 27% on Friday, while U.S.-listed shares of Tencent Music rose 4% after nearly halving in value last week. ViacomCBS (NASDAQ:), Baidu (NASDAQ:) and VIPShop fell between 0.2% and 1.5%.

“This incident reminded markets of the dark side of leverage, likely leading some players to cut their risk exposure near record highs to avoid any serious losses if the selling snowballs,” said Marios Hadjikyriacos, investment analyst at online broker XM in Cyprus.

Wall Street’s main indexes surged over 1% in a late-session rally on Friday as investors looking to rebalance their portfolios at the end of the quarter, piled into economy-linked banks, energy, materials as well as technology names.

The Dow and the are less than 1% from their record highs, while the tech-heavy Nasdaq is still about 7.1% from its February all-time high.

At 06:38 a.m. ET, Dow E-minis were down 124 points, or 0.38%, S&P 500 E-minis were down 14.5 points, or 0.37% and E-minis were down 32.75 points, or 0.25%.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.


Source link

Show More

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button