Daily market review

United States

Major equities indexes were narrowly mixed Monday; most sectors declined with notable weakness in financials and energy. Banks were hit by de-risking linked to the forced sale of positions by Archegos Capital Management and its prime brokers. The Dow Jones industrial average rose 0.3 percent, the S&P 500 eased 0.1 percent, and the NASDAQ slipped 0.6 percent.

On the positive side, traffic in the Suez Canal resumed after the huge Ever Given container ship was freed and after the White House floated its big infrastructure plans calling for $4 trillion in new spending.

Among sectors: travel & leisure, restaurants, and retail hurt consumer discretionary shares, while technology suffered from a selloff in chipmakers. Health care held up better along with industrials on strength in Boeing, up 2.3 percent, on news of a big order from Southwest Airlines. Defensives held up best with utilities and consumer staples leading.

Archegos fallout included Nomura down 14 percent, Credit Suisse down 11 percent, and Morgan Stanley down 2.6 percent during US hours. Among energy shares, Apache, the driller, fell 4.4 percent.

Select media shares remained under pressure including ViacomCBS, down 6.7 percent, and Discovery, down 1.6 percent; and Chinese internet ADRs were also under pressure after their prices plunged Friday in the forced Archegos liquidation. Other communications stocks fared better, including Facebook, up 2.8 percent, and Twitter, up 2.7 percent.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 59 cents to US$65.05 while spot gold fell US$20.58 to US$1,711.46. The US dollar rose vs. most major currencies. The US Treasury 30-year bond yield rose 3 basis points to 2.41 percent and the 10-year note yield rose 3 basis point to 1.71 percent.


Equities were narrowly mixed Monday with defensives holding up best while most cyclicals/value stocks weakened on renewed Covid worries, and financials were hit by fallout from the Archegos affair. The Stoxx 600 pan-European index rose 0.2 percent, the German Dax and the French CAC both gained 0.5 percent, and the UK FTSE 100 eased 0.1 percent.

Rising Covid case counts and expectations for more lockdowns in France and Germany depressed materials, miners, oil & gas, and travel & leisure shares.

Markets reacted badly to German Chancellor Angela Merkel's threat to step up national anti-Covid efforts if German states do not act more aggressively to contain what looks like another wave of infections. German and French shares outperformed on their exposure to China after unexpectedly strong Chinese industrial profits figures.

Financials lagged with Credit Suisse dropping 14 percent after warnings its first-quarter results could see a big hit as a result of forced liquidation of stock holdings by its client, Archegos. Deutsche Bank fell 3.5 percent on a management change. Swedish retailer H&M fell 2.8 percent on store closings in China after the firm talked about forced labor in Xinjiang.

Defensive sectors held up best with food & beverages, utilities, and personal & household goods outperforming.

Among companies in the news, Relief Therapeutics, the Swiss biopharma, jumped 21 percent on positive clinical trial news for its anti-Covid medicine. Klovern, the Swedish real estate company, rose 16 percent on news of a takeover offer.

Asia Pacific

Asia/Pacific equities markets were mixed to better Monday though Australia lagged on bad Covid news. Risk appetite was hurt by fallout from the Archegos collapse and rising US-China tensions, offset in part by a resumption in trade flows through the Suez Canal and positive vaccine headlines.

Chinese markets gave up initial gains to end flat to firmer. China's Shanghai composite index edged up 0.3 percent, the broader Chinese CSI300 firmed 0.2 percent, and the Hong Kong Hang Seng index was flat. Selected growth stocks, including Baidu (down 5 percent) plus financials, came under pressure linked to forced selling stemming from Archegos. On the positive side were upbeat industrial profit data from China.

Japanese shares ended higher as growth stocks beat value. The Nikkei 225 index gained 0.7 percent and the broader Topix rose 0.5 percent. Sectors were mixed with financials lagging as Nomura dropped 16 percent after the brokerage warned it could face big losses in connection with the forced liquidation of shares owned by Archegos. Technology shares outperformed with chipmaker Tokyo Electon up 3.3 percent, and retail advanced with Fast Retailing up 0.9 percent.

Australian shares fell after Brisbane re-imposed a three-day anti-Covid lockdown, with the All Ordinaries index down 0.4 percent. Most sectors sold off, paced by information technology, with buy-now-pay-later leader Afterpay down 4.2 percent. Materials and miners outperformed with BHP up 1.8 percent. Travel stocks suffered on the lockdown news. Australian wine stocks were hit by new Chinese tariffs, with Treasury Wine Estates down 1.4 percent.

In economic news, Chinese industrial profits rose 178.9 percent year-to-date for January and February combined. The outsized growth in profits partly reflected the base effects of very weak profits for the same period in 2020 during the initial impact of the Covid-19 pandemic.

Looking ahead*

On Tuesday in Asia/Pacific, Japanese unemployment and Japanese retail sales figures are scheduled. In Europe, reports are due on KOF Swiss leading indicators, Italian PPI, Eurozone economic sentiment, and German CPI. In North America, US Case Shiller home price index, US FHFA house price index, and US consumer confidence releases are on tap.

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