Global shares edge higher as investors look past Archegos shockwave to COVID-19 developments, while US tech shares ease

Craig Ruttle/AP

  • Global stocks edged slightly higher on Tuesday as investors shrugged off the Archegos hedge fund default.
  • Futures on the Dow Jones rose 0.2%, while those on the Nasdaq 100 fell 0.5%.
  • Investors are anticipating President Joe Biden’s infrastructure spending speech on Wednesday.
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Global stocks rose on Tuesday, as investors shrugged off worries about wider fallout from the $35 billion Archegos default to focus instead on the worldwide progress of the COVID-19 vaccination program.

Futures on the Dow Jones rose 0.2% and the S&P 500 was about flat, suggesting a mixed open for US indices later in the day, while futures on the Nasdaq 100 fell 0.5%, pointed to a lower start for the technology sector. The Dow Jones hit an all-time high on Monday, but the tech-heavy Nasdaq saw a bigger pullback.

A spokesperson for Archegos, the family office of “Tiger cub” Bill Hwang, told Bloomberg in an email “all plans are being discussed” to determine the best path forward. Shares in banks linked to the risky trades didn’t see as much of a decline as Monday, when the financial sector was among the worst performing sectors of the European stock market.

US regulators have called in the banks involved for a “fireside chat,” according to Jeffrey Halley, a senior market analyst at OANDA.

Meanwhile, ViacomCBS fell a further 6.6%, losing more than half its value since a week ago, and Discovery fell another 1.6%.

“Just because markets appear to have moved on this morning, doesn’t mean the dust has settled on Archego Capital’s collapse,” Connor Campbell, a financial analyst at SpreadEx, said. “That situation could still have some nasty surprises up its sleeve.”

Separately in the US, President Joe Biden is expected to deliver a speech on infrastructure spending on Wednesday. The plan could cost as much $4 trillion in new outgoings and include $3.5 trillion in tax hikes, according to the Washington Post. The administration is not expected to expand the child tax credit permanent. Investors are also anticipating the next non-farm payrolls scheduled to release on Friday.

The 10-year US Treasury yield continued its march higher, rising 5 basis points to 1.77%, its highest since the start of the pandemic just over a year ago.

While Europe is at the forefront of a potential new wave of coronavirus infections, the US Centers for Disease Control and Prevention has also warned the country risks facing a fresh wave of cases.

In the UK, Prime Minister Boris Johnson said he was hopeful no more lockdowns would be required as the country took its first significant step of easing out of restrictions on Monday.

London’s FTSE 100 rose 0.7%, the Euro Stoxx 50 rose 0.5%, and Germany’s DAX rose 0.6%.

The Ever Given ship in the Suez Canal was finally freed by a huge dredging vessel after being stuck for nearly a week, allowing normal traffic to resume. But the canal authority says it could take multiple days to clear out the backlog of ships that had built during the blockage. Oil prices were mostly tepid, with Brent crude falling slightly by 0.2% to $61.45 and West Texas Intermediate falling 0.1% to $64.87.

Asian markets received a boost from the Suez Canal news, helped by ByteDance’s latest $250 billion valuation in the private market. China’s Shanghai Composite rose 0.6%, Japan’s Nikkei rose 0.2%, and Hong Kong’s Hang Seng rose 0.8%.

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