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Global Market Report - 30 March

Lex Hall  |  30 Mar 2021Text size  Decrease  Increase  |  
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Australia

Australian shares are set to rise despite a dip on Wall St as bank shares suffered from the fallout of a US hedge fund defaulting on margin calls.

The Australian SPI 200 futures contract was up 38 points, or 0.6 per cent, at 6,798 points at 8.30am Sydney time on Tuesday, suggesting a positive start to trading.

The S&P 500 ended just slightly in the red on Monday, with bank shares falling amid warnings of potential losses from a hedge fund’s default on margin calls, while optimism over the economy limited the day’s declines.

Nomura and Credit Suisse are facing billions of dollars in losses after a US hedge fund, named by sources as Archegos Capital, defaulted on margin calls, putting investors on edge about who else might have been caught out.

The Dow Jones Industrial Average rose 98.49 points, or 0.3 per cent, to 33,171.37, the S&P 500 lost 3.45 points, or 0.09 per cent, to 3,971.09 and the Nasdaq Composite dropped 79.08 points, or 0.6 per cent, to 13,059.65.

Locally, Commonwealth Bank is urging under-pressure property investors to consider cashing in on rising house prices by selling into the booming market, The Australian reports.

On Monday, miners were strong but unable to offset losses in most sectors as the Australian share market closed a little lower.

The S&P/ASX200 benchmark index closed down 24.7 points, or 0.36 per cent, to 6,799.5.

The All Ordinaries closed lower by 26.7 points, or 0.38 per cent, to 7,036.4.

The materials sector, which includes miners, was the strongest and rose 1.3 per cent.

The biggest loss was in the information technology sector, 2.77 per cent.

There were slumps of more than one per cent in consumer discretionaries and telecommunications.

Gold was down 1.3 per cent at $US1710.23 an ounce; Brent oil was up 0.5 per cent to $US64.88 a barrel; Iron ore was up 4.1 per cent to $US167.88 a tonne.

Meanwhile, the Australian dollar was buying 76.31 US cents at 8.30am, up from 76.26 US cents at Monday’s close.

Asia

China’s benchmark Shanghai Composite Index gained 0.5 per cent on Monday, while the Shenzhen Component Index rose 0.01 per cent.

Shanghai’s tech-heavy STAR 50 Index lost 0.47 per cent for the day, while Shenzhen’s similar ChiNext Index fell 0.42 per cent.

In Hong Kong, the Hang Seng Index closed almost flat, up by just 1.87 points at 28,338.30 points as the outperformance of old economy stocks offset the selloff of tech names.

The Hang Seng Tech Index fell by 1.83 per cent at 7,981.07.

Japanese shares closed higher on Monday on optimism around domestic corporate earnings and an economic recovery in the US, although concerns about a potential $2 billion loss flagged by brokerage Nomura Holdings limited gains.

The Nikkei share average rose 0.71 per cent to close at 29,384.52, while the broader Topix rose 0.46 per cent to close at 1,993,34 after turning negative during the session.

Europe

European stocks edged higher in a choppy session on Monday, weighed down by Credit Suisse shares, which slumped following a warning of “significant” losses from exiting positions after US-based hedge fund Archegos defaulted on margin calls.

The Swiss bank slipped 13.8 per cent to a three-month low as it said the unnamed hedge fund defaulted on margin calls made last week by Credit Suisse and other banks and said that while it was “premature to quantify” the resulting loss, “it could be highly significant and material to our first quarter results.”.

“It is unclear whether Archegos is done with its fire sales, and if it isn’t, how much it has left to unload,” said Connor Campbell, an analyst at Spreadex.

“That also raises questions over the wider ramifications of the hedge fund’s troubles, and which companies will be the next to announce they have been stung.”

The wider financial services index was the worst performer, losing 1.9 per cent, while the banks sector, which includes Deutsche Bank and UBS, also slipped 0.9 per cent.

The pan-European STOXX 600 index edged 0.2 per cent higher, with economy-linked mining, oil & gas and travel and leisure shares among the biggest decliners as French doctors warned a third wave of infections could soon overwhelm hospitals.

Chancellor Angela Merkel also pressed Germany’s states on Sunday to step up efforts to curb rapidly rising coronavirus infections, and raised the possibility of introducing curfews to try to get a third wave under control.

The benchmark STOXX 600 has lagged its US counterpart in the past six months as new lockdowns in the continent and a slower-than-expected vaccination programme dented the economic outlook for Europe.

The export-heavy German DAX rose 0.5 per cent to an all-time high as data over the weekend showed annual profits at China’s industrial firms surged in the first two months of 2021, highlighting a rebound in the country’s manufacturing sector.

Among other stocks, Hugo Boss slipped 1.6 per cent after the German fashion house got caught in a concerted boycott by Chinese celebrities and consumers over Western accusations of forced labour in Xinjiang.

Poland’s CD Projekt jumped 13.1 per cent to the top of STOXX 600 index after plans about the studio’s downloadable content for its Cyberpunk 2077 game leaked on Reddit.

Gains in defensive sectors such as food & beverage utilities, media, which tend to decouple from the economic cycle, offered some support to the market.

North America

The S&P 500 ended just slightly in the red on Monday, with bank shares falling amid warnings of potential losses from a hedge fund’s default on margin calls, while optimism over the economy limited the day’s declines.

The Dow ended higher, with shares of planemaker Boeing Co rising 2.3 per cent after the company reached a deal with US budget carrier Southwest Airlines Co for a variant of the 737 MAX aircraft.

Nomura and Credit Suisse are facing billions of dollars in losses after a US hedge fund, named by sources as Archegos Capital, defaulted on margin calls, putting investors on edge about who else might have been caught out.

Shares of big US banks and even regional banks fell on the news. The KBW Nasdaq Bank stock index ended 2.3 per cent lower after falling nearly 3.5 per cent during the session.

“There’s still chatter as to whether or not, and which, American banks may be affected. That is a question that’s lurking. But so far the market has taken (the news) in stride essentially,” said Quincy Krosby, chief market strategist at Prudential Financial in Newark, New Jersey.

Indexes ended off their lowest levels of the day. Optimism about speedy vaccinations and record stimulus, which drove the Dow and the S&P 500 to record closing highs last week, helped keep a floor in the market along with upbeat estimates for upcoming earnings, she said.

The Dow Jones Industrial Average rose 98.49 points, or 0.3 per cent, to 33,171.37, the S&P 500 lost 3.45 points, or 0.09 per cent, to 3,971.09 and the Nasdaq Composite dropped 79.08 points, or 0.6 per cent, to 13,059.65.

Discovery Inc, ViacomCBS, US-listed shares of Baidu and VIPShop, all linked to Archegos, fell, extending recent losses.

The Nasdaq was on track to post its first monthly decline in five months.

Investors may also be adjusting their holdings for quarter-end “window dressing,” Krosby said.

Volume on US exchanges was 11.02 billion shares, compared with the 13.6 billion average for the full session over the last 20 trading days.

With Reuters

is content editor for Morningstar Australia

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