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Wall Street opens in the red

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The market in New York got off to a slower start on Monday as the fallout from last Friday’s fire sale hit US traders.

Shortly after the opening bell, the Dow Jones Industrial Average was down 0.29% at 32,977 while the S&P 500 dropped 0.35% to 3,960 and the Nasdaq fell 0.31% to 13,097.

Last week’s margin call from a hedge fund has forced a number of major banks such as Credit Suisse and Nomura to unwind their positions, pushing stocks lower.

However, there was some good news for the markets after reports emerged that the container ship that blocked the Suez Canal last week has finally been freed six after grounding itself across the key global trade artery.

7:40am: Wall Street to start mostly lower

The main Wall Street indices are expected to open mostly in the red on Monday after a fire sale on Friday piled pressure on markets at the start of the week.

The tech-heavy Nasdaq 100 is expected to open little changed but the Dow Jones Industrial Average is tipped to fall 109 points to 32,964 and the S&P 500 is expected to ease 11 points to 3,964.

“Banks are under pressure in Europe. Credit Suisse dropped 10% after warning it could suffer a significant hit to profits as it starts to unwind positions after a hedge-backed [sic] client defaulted on a margin call. The forced unwinding of positions also hit Japanese bank Nomura, which tumbled 16%, in its biggest sell-off on record,” said OANDA’s Sophie Griffiths.

“Investors are bracing themselves for more volatility in the US when markets open after a USD20 billion fire sale on Friday, triggered by Archegos. The firm has concentrated holdings in Viacom and Baidu, whose shares have been under pressure in recent weeks. These developments certainly raise questions surrounding the rise of margin debt and over leveraging,” she added.

There is little in the way of macroeconomic data due out in the US; everything is just a warm-up act for Friday’s non-farm payrolls release.

Four things to watch for on Monday:

  • The earnings diary will see results from egg producer Cal-Maine Foods Inc (NASDAQ:CALM) as well as biotechs Vaxcyte Inc (NASDAQ:PCVX) and Matinas BioPharma Holdings Inc (NYSEAMERICAN:MTNB)
  • Shares in Tencent Music Entertainment Group (NYSE:TME) will be in focus after the Chinese music streaming firm announced plans for a US$1bn share buyback overnight
  • White goods maker Whirlpool Corp (NYSE:WHR) may also attract attention after the president of its Chinese arm, Jason Ai, told Reuters that a global shortage of computer chips was leaving appliance makers unable to meet global demand
  • On the macro front, investors will be eyeing the Dallas Fed manufacturing index for March

Story by ProactiveInvestors


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