The mood was cautious in Asia on Monday, with Asian stocks mixed, the dollar little changed and gold hovering around 1730 as markets focused on details of Biden’s infrastructure plan following jitters over Morgan Stanley’s massive sale of ViacomCBS shares on Friday.
By the close of trading, Australia’s S&P/ASX200 was down 0.36%; The Nikkei 225 closed up 0.53 per cent; South Korea’s Kospi index closed down 0.16%. A shares were mixed.
U.S. futures fell to session lows, with Nasdaq futures down 1%. Trading activity was subdued as the quarter’s end neared.
In addition, the Nomura and ViacomCBS events caused some nervousness in the market.
Japanese investment bank Nomura Holdings said in a statement Monday that an incident on March 26 May have left one of its U.S. subsidiaries with a significant loss on a trade with a U.S. client. The amount requested from the client was estimated at about $2 billion, based on market conditions as of Tuesday. The bank said it was assessing the extent of any losses and their impact on results.
Foreign media speculation, this large probability and rumors of the Archegos fund explosion warehouse. Tengyue and Bill Hwang’s Archegos Capital, two of the most prominent funds in China and U.S. media stocks that have been in short supply on Friday, both opened accounts at Nomura. Archegos Capital Management has closed nearly $30 billion worth of shares.
Last week, Tencent music, iQIYI,Vipshop1, with who learn, Baidu and many other Chinese stocks were bloodied, the stock price huge shock. By Friday, the storm had intensified. A $20 billion block of deals, reportedly linked to investment fund Archegos Capital, rocked the market Friday. It has also prompted some caution.
According to sources, the $15 billion Archegos Capital fund is used to three to four times high leverage, and has heavy positions in ViacomCBS, Discovery, Baidu, Tencent Music and other related stocks. But these stocks have been hit by a spate of bad news in recent days, with reports that the fund may place large sell orders through Goldman Sachs in a number of popular stocks triggered by “forced deleveraging”.
The potential for more big trades still hangs over the market, and the traditional end-of-quarter volatility can exacerbate big swings in high-flying stocks.
There could be more noise than signal this week, and the Archegos Capital news could exacerbate that. Last week’s massive sell-off of Viacom had little impact on the overall market, but so far it has suddenly “worked” in early trading today.
In essence, it causes anxiety and fear because when the market goes wrong, people think that “there will never be just one bad egg in the pile.”
But with month-end and quarter-end cash flows taking center stage this week, all this is likely to only add to the noise in the coming days.
In currencies, the yen led gains among major currencies, while the dollar was also expected to hold steady as commodity currencies lagged slightly.
Elsewhere, the drop in oil prices as the Suez Canal resurfaced has had a bigger impact on the Canadian dollar. Spot gold, meanwhile, remained in a tight range and is currently trading around $1,730.
Treasury yields retreated from their highs at the end of last week, with the 10-year yield falling 3 basis points to 1.645 per cent today. This may be partly reflected in the more risk averse tone of the market, but it will be seen later whether this trend is sustained.
This trading day, the market is focused on the US infrastructure plan news. President Joe Biden’s administration will this week unveil the first part of a multitrillion-dollar infrastructure plan that will focus on roads and Bridges. The second part, expected in April, covers children and health care. Mr. Biden will unveil details of the plan on Wednesday, according to a White House itinerary. Media reports last week put the total infrastructure plan at $3 trillion.
Trend analysis of major currencies:
EUR: Euro/dollar’s losses moderated after losing the key 200-day moving average and is now trading around the 1.18 level. Technically, the MACD red momentum column expanded slightly on the 4-hour chart, with the RSI index rebounding close to the 50 level and the KDJ index rebounding close to the 50 level, indicating that prices may move higher in the short term. Initial short-term support stands at 1.1750, initial resistance is seen at 1.1820.
GBP: Cable/USD consolidates high, building on two-day gains, and is now trading around 1.3790. Technically, on the 4-hour chart, the MACD red momentum column is gradually weakening, the RSI index has rebounded above the 50 level, and the KDJ index has hit the 50 level from the overbought level, suggesting further price consolidation in the short term. Initial short-term support stands at 1.3720, initial resistance is seen at 1.3820.
JPY: USD/JPY consolidates after hitting new highs for the year last week and is now trading around 109.50. Technically, from the 4-hour chart, MACD red momentum column gradually weakened, RSI indicator since overbought level down, KDJ indicator also since overbought level down, prices are expected to continue to move lower in the short term. Initial short-term support stands at 109.10, initial resistance stands at 109.90.