Investing.com — Two banks warn of big losses after Friday’s chaotic unraveling of a hedge fund portfolio. President Joe Biden prepares to lay out his green spending plans, but other plans on healthcare and childcare will have to wait until April. The pandemic roars back in Europe, South America and the Indian sub-continent, and oil prices fell after the ship blocking the Suez Canal was partially freed from the canal’s walls. Here’s what you need to know in financial markets on Monday, March 29th.
1. Credit Suisse (SIX:CSGN), Nomura warn of big losses after hedge fund fiasco
Two banks warned of significant losses from exposure to a single hedge fund, whose default on margin calls triggered Friday’s multi-billion dollar firesale of stocks in New York.
Japanese giant Nomura said it could face a hit of $2 billion, driving its stock down 16% in Tokyo trading, while Credit Suisse (NYSE:CS) stock fell 14% in Europe after it warned of a hit that “could be highly significant and material to our first quarter results.”
Credit Suisse warned that “other banks” too are still exiting positions associated with the client, which Bloomberg identified as Archegos Capital Management, the family office fund of former hedge fund manager Bill Hwang. The extreme volatility in stocks such as ViacomCBS (NASDAQ:VIAC) and Discovery (NASDAQ:DISCA), Baidu (NASDAQ:BIDU) and Tencent Music Entertainment (NYSE:TME) on Friday has sparked fears that prime brokerages could tighten their lending rules, tightening overall liquidity in the market.
2. Biden to lay out infrastructure spending plans this week
President Joe Biden intends to split a giant new spending initiative into two, White House press spokeswoman Jen Psaki said on Sunday.
The first part, to be unveiled at an event this week, will focus on infrastructure projects, notably on the green energy transition, while the second, focusing on healthcare and child care, will be released in April.
The two projects represent the core of the U.S.’s ‘build back better’ plans, a slogan that has been adopted with local variations around the world as governments use the post-Covid reconstruction to address shortcomings in their respective economic and social systems.
The Biden administration is likelier to win Republican support in the Senate for the infrastructure bill than for other spending measures that hint at a long-term expansion of the welfare state in the U.S., something that many Republicans fear would go hand-in-hand with large tax increases.
3. Stocks set to open lower as traders wait for more shoes to drop
U.S. stocks are set to open lower, amid uncertainty over the extent of liquidations stemming from the Archegos margin calls.
By 6:30 AM ET (1130 GMT), Dow Jones futures were down 130 points, or 0.4%, while S&P 500 futures were down 0.4% and Nasdaq 100 futures were down 0.2%.
On a day when both the earnings and data calendars are almost entirely empty, other stocks in focus are likely to include Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS), two of the banks who were most active in Friday’s block trades. Also in focus will be Visa (NYSE:V), which said it would start processing payments made in USD Coin, a digital currency tied to the dollar.
4. Merkel threatens tighter lockdown; S. American, Indian Covid-19 cases continue to soar
Concerns about the ongoing problems of much of the world in bringing the Covid-19 pandemic under control are also weighing.
Europe’s latest wave continues to build, with France approaching capacity in its intensive care units and German Chancellor Angela Merkel threatening to invoke emergency federal powers to enforce stricter lockdowns in Europe’s largest economy.
In South America, meanwhile, Brazil and Chile continue to see new infections running at record rates, while Colombia, Argentina and Peru all have fast-rising case numbers.
The Indian sub-continent also remains a major source of concern, with infection rates running at their highest since October in India, and close to record levels in Pakistan and Bangladesh.
5. Oil dips after Suez Canal ship “partially freed”
The ship blocking the Suez Canal has been “80%” freed, according to the Suez Canal Authority, bringing an end to the serious disruption of global trade closer.
Bloomberg quoted the head of the salvage company executing the operation as saying, however, that only “the easy part” had been done and that “we don’t want to celebrate too early.”
Crude oil prices fell on the news, but by 6:30 AM ET (1130 GMT) had recovered to $60.94 a barrel, up 0.1% on the day. Brent crude was up 0.5% at $64.73 a barrel.
Source: Economy - investing.com
