STOCKS TREAD GINGERLY AS ARCHEGOS CAPER WORRIES TRADERS

US stocks traded up from the lowest levels of the day as traders weighed the level of contagion from forced block trades through financial markets. Oil fluctuated, Claire Ballentine and Olivia Raimonde reported for Bloomberg News on March 30, 2021.

Financial and energy shares pushed the S&P 500 down following revelations that Archegos Capital Management LLC -- the family office of Bill Hwang -- was behind a $20 billion spree of block trades on Friday, selling Chinese tech giants and US media firms. Goldman Sachs Group Inc. and Morgan Stanley led banking shares lower on speculation an unwinding of the underlying positions should lead to losses for the industry.

“There’s always a fear of when you hear about a run on a bank or margin calls, there’s always fears of -- is this going to be a systemic event?” said Leslie Thompson, managing member of Spectrum Management Group.

Small ripples of the forced unwind were felt in credit markets. Nomura had to take the rare step of canceling a bond deal that had already priced after its loss warning. The investment-grade credit default swaps index, a gauge of U.S. credit fear, was relatively calm, even though traders are demanding a higher cost to hedge against losses on the debt of banks that have been caught up in the Archegos situation, including Nomura and Credit Suisse.

The S&P 500 Index decreased 0.3% to 3,961.96 as of 12:02 p.m. New York time. The Dow Jones Industrial Average declined 0.1% to 33,047.06. The Nasdaq Composite Index sank 0.8% to 13,036.17.

The Nasdaq 100 Index dipped 0.5% to 12,915.40. The Stoxx Europe 600 Index advanced 0.2% to 427.61, the highest in about 13 months. In currencies, the Bloomberg Dollar Spot Index climbed 0.1% to 1,149.22.

The euro dipped 0.1% to $1.1779. The British pound gained 0.1% to $1.3796, the strongest in a week. The Japanese yen depreciated 0.1% to 109.73 per dollar, the weakest in a year. The yield on 10-year Treasuries gained one basis point to 1.69%, the highest in a week. The yield on 30-year Treasuries advanced two basis points to 2.40%, the highest in a week.

Germany’s 10-year yield climbed three basis points to -0.32%, the highest in a week. Britain’s 10-year yield advanced three basis points to 0.788%, the highest in a week on the largest gain in more than a week. West Texas Intermediate crude gained 0.5% to $61.28 a barrel, the highest in a week. Gold depreciated 1.2% to $1,712.06 an ounce, the weakest in three weeks on the largest drop in almost four weeks, Vildana Hajric reported for Bloomberg News.

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