Stocks slide as banks warn of significant losses tied to hedge fund's liquidation
Friday’s hedge fund unwind will be contained, short-term: Expert
Fairlead Strategies founder and managing partner Katie Stockton on the Archegos hedge fund, financial stocks and bitcoin.
U.S. equity markets were mixed Monday as banks were left licking their wounds after a large hedge fund was forced to unwind billions of dollars in positions.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| I:DJI | DOW JONES AVERAGES | 33030.13 | -42.75 | -0.13% |
| SP500 | S&P 500 | 3958.36 | -16.18 | -0.41% |
| I:COMP | NASDAQ COMPOSITE INDEX | 13053.586025 | -85.14 | -0.65% |
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The Dow Jones Industrial Average rose 20 points, or 0.05%, while the S&P 500 and the Nasdaq Composite were little changed.
The hedge fund Archegos Capital Management was on Friday forced to sell nearly $30 billion of holdings of U.S. media stocks and Chinese internet ADRs after facing margin calls on heavily leveraged positions.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| VIAC | VIACOMCBS, INC. | 46.68 | -1.55 | -3.21% |
| DISCA | DISCOVERY, INC. | 42.50 | +0.60 | +1.43% |
| BIDU | BAIDU, INC. | 200.70 | -7.91 | -3.79% |
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The fire sale caused significant losses in ViacomCBS and Discovery Inc., as well as Baidu Inc. and Tencent Holdings, among others.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| CS | CREDIT SUISSE GROUP AG | 11.21 | -1.65 | -12.79% |
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The impact is now being felt at investment firms Credit Suisse Group AG and Nomura Holdings, which are warning of significant losses tied to the selling of Archegos' positions.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| JPM | JPMORGAN CHASE & CO. | 152.90 | -2.17 | -1.40% |
| GS | THE GOLDMAN SACHS GROUP, INC. | 324.00 | -3.48 | -1.06% |
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Dow components JPMorgan Chase & Co. and Goldman Sachs Group Inc. were among the laggards due to fallout from the selling and as easing of longer-dated bond yields flattened the yield curve.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| BA | THE BOEING CO. | 252.66 | +8.09 | +3.31% |
| LUV | SOUTHWEST AIRLINES CO. | 62.15 | +0.82 | +1.34% |
| AAL | AMERICAN AIRLINES GROUP, INC. | 23.17 | +0.24 | +1.05% |
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Elsewhere, Boeing Co. provided support to the Dow after receiving an order from Southwest Airlines Co. for 100 737 Max 7 jets, which will begin being delivered in 2022. The deal includes an option for Southwest to purchase an additional 155 Max jets through 2031.
In other airline news, American Airlines reported global bookings are rebounding.
"As of March 26, the Company’s seven day moving average of its net bookings is approximately 90% of the level experienced in 2019, with a domestic load factor of approximately 80% during that same period" the carrier disclosed in an SEC filing.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| V | VISA, INC. | 211.74 | -1.74 | -0.81% |
| MA | MASTERCARD, INC. | 360.56 | -6.00 | -1.64% |
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Visa Inc. launched a pilot program that will allow customers to settle transactions using the cryptocurrency USD Coin, a stablecoin pegged directly to the U.S. dollar.
In commodities, West Texas Intermediate crude oil slid 52 cents to $60.45 per barrel as the Ever Given container ship was refloated in the Suez Canal. Elsewhere, gold fell $9.40 to $1,725.30 per ounce.
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Overseas markets were mostly higher.
France’s CAC 40 paced the advance in Europe, trading up 0.31%, while Germany’s DAX 30 rose 0.46% and Britain’s FTSE 100 lost 0.48%.
In Asia, Hong Kong’s Hang Seng index edged up 0.01%, China’s Shanghai Composite advanced 0.5% and Japan’s Nikkei 225 climbed 0.71%.
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