London — Global stock markets rose on Tuesday as investors shook off worries about a hedge fund default that hit international banking stocks overnight and remained focused on global Covid-19 vaccination.
European stocks opened higher with the regional Stoxx 600 index up 0.5%. Britain’s FTSE 100 rose 0.6%, Germany’s DAX and Italy’s FTSE MIB rose 0.5% each, and France’s CAC 40 rose 1%.
MSCI’s all country world index, which tracks stocks across 49 countries, traded flat. S&P 500 stock futures were off 0.1%.
Sentiment in Asia was mixed early on, then turned positive with most of the region’s major markets trading higher.
Nomura and Credit Suisse are facing billions of dollars in losses and regulatory scrutiny after a US investment firm, named by sources as Archegos Capital, defaulted on equity derivative bets, putting investors on edge about who else might be exposed.
Nomura shares were down a further 1.1% on Tuesday after dropping as much as 16% on Monday, when it revealed it could take a $2bn loss from the hedge fund fallout.
“From a market perspective with contagion looking limited … despite the news flow of further forced liquidations and prime brokerage losses, this looks, at this stage, to be a positioning- driven sell-off in US futures and various single stock names,” said Eleanor Creagh, market strategist at Saxo Bank.
Creagh added that further forced deleveraging was still a risk if prime brokers tighten margin requirements.
MSCI’s broadest index of Asia-Pacific shares excluding Japan was 0.6% higher. Mainland China’s CSI 300 index rose 1%.
Hong Kong’s Hang Seng index gained 1.2% to reach 28,668 points, driven up by a rebound in the city’s tech stock index. That index has been under pressure from concern over the Chinese government’s move to increase regulation of those companies.
Japan’s Nikkei was flat, dragged down by Nomura’s share price weakness. Australia sounded a weaker tone when the S&P/ASX200 closed down 0.9% at its lowest point for a week.
Credit Suisse’s Asia Pacific senior investment strategist Jack Siu said the prospect of Asian travel bubbles had sparked enthusiasm among some investors in the region. “Tourism-dependent Asian economies will benefit,” he said.
On Monday, Hong Kong’s commerce secretary Edward Yau flagged that the government had restarted talks with Singapore to re-establish a potential travel bubble between the cities.
Investor sentiment was still closely tied to the pace of the global vaccine rollout, said Citigroup equity derivative solutions director Elizabeth Tian. “Investors will also be watching the number of Covid-19 cases as rises in Western Europe and the Philippines sees the return of renewed restrictions, while vaccination attempts threaten to stall amid supply constraints and vaccine nationalism,” she said. “While restrictions are increased in Europe, the UK will be relaxing stay-at-home rules.”
On Monday, Wall Street pared early losses driven by the banking sector on fears that issues from the downfall of Archegos could spread throughout the banking sector.
The Dow Jones Industrial Average rose 0.3%, the S&P 500 lost 0.09% and the Nasdaq Composite dropped 0.6%.
Benchmark US 10-year treasury yields hit 1.7760%, their highest since January 2020.
In currencies, the dollar rose to its highest in a year against the yen, boosted by the spike in treasury yields. The euro fell to $1.1751 against the dollar for the first time since November 11.
Oil prices fell as the Suez Canal opened up after days closed by a grounded supercarrier and focus turned to a meeting of oil cartel Opec and its allies (Opec+) this week at which the extension of supply curbs may be on the table amid new coronavirus pandemic lockdowns.