GLOBAL MARKETS-Global shares slide after hedge fund's default

  • Reuters
  • Stock Market News
GLOBAL MARKETS-Global shares slide after hedge fund's default
Credit: © Reuters.

(Adds close of European markets, comment)

* Nomura, Credit Suisse warn on losses after Archegos share sale

* Ten-year bond yields rise ahead of Biden infrastructure plan

* Oil prices turn positive as traffic resumes on Suez Canal

* Asset performance:

* World FX rates:

By Herbert Lash

NEW YORK, March 29 (Reuters) - A gauge of global equities fell on Monday after Nomura 8604.T and Credit Suisse CSGN.S warned of billions of dollars in losses from an unnamed U.S. hedge fund's default, while crude prices slid as container traffic in the Suez Canal resumed.

Nomura said it faced a potential $2 billion loss due to transactions with an unnamed U.S. client while Credit Suisse said a default on margin calls by a U.S.-based fund could be "highly significant and material" to first-quarter results. at the hedge fund, named by sources as Archegos Capital Management, triggered a fire sale of stocks on Friday.

Nomura shares in Japan closed down 16.3%, a record one-day drop, while Credit Suisse shares fell 13.8%.

The default is likely confined but with portfolio rebalancing at quarter end, "weird stuff" can happen at funds that are over-leveraged, said Thomas Hayes, chairman and managing member at New York hedge fund Great Hill Capital LLC.

"It was a confluence of several events compounded by the recent sell-off and weakness in the tech sector, which most hedge funds are leveraged to," Hayes said.

Bourses in Paris, Frankfurt and London recouped early losses to close slightly higher or flat, but financial and bank shares fell on both sides of the Atlantic. The financial services index .SXFP in Europe lost 2% and the region's banks sector .SX7P fell 1.03%.

The U.S. KBW bank index .BKX fell 2.6% as JPMorgan Chase & Co (NYSE: JPM ) JPM.N and Wells Fargo (NYSE: WFC ) & Co WFC.N , down 1.7% and 3.8% respectively, weighed the most on the S&P 500 after a 1.1% slide in Microsoft Corp MSFT.O and Tesla Inc's TSLA.O 1.8% decline.

MSCI's all-country world index fell 0.25% while Europe's broad FTSEurofirst 300 index .FTEU3 added 0.19% to close at 1,647.63.

On Wall Street, the Dow Jones Industrial Average .DJI fell 0.16%, the S&P 500 .SPX lost 0.43% and the Nasdaq Composite .IXIC dropped 0.95%.

The dollar gained in choppy trading, with the euro trading below $1.18 and commodity currencies falling, as the greenback drew some safe-haven bids on concerns about the potential fallout from the Archegos default.

The dollar index , a measure of the greenback's value against six other major currencies, hit as high as 92.964, its strongest level since November.

The index =USD rose 0.041%, with the euro EUR= down 0.11% to $1.1779. The Japanese yen JPY= weakened 0.09% versus the greenback to 109.72 per dollar.

Euro zone government bond yields rose as relief from the refloating of the container ship blocking the Suez Canal prompted some selling of safe-haven assets. But rising COVID-19 cases kept investors broadly cautious about Europe.

German yields rose on Friday and continued to climb on Monday. The 10-year bund yield rose 4 basis point to a six-day high of minus 0.32% DE10YT=RR .

Longer-dated Treasury yields rose on investor expectations that U.S. President Joe Biden's infrastructure initiative to be announced Wednesday could mean faster economic growth and a dramatic increase in Treasury bond issuance.

The 10-year U.S. Treasury US10YT=RR note rose 3.2 basis points to 1.6903%, after earlier again climbing above 1.7%.

Oil fell as the Ever Given container ship that has blocked the Suez Canal for nearly a week was refloated and traffic in the waterway resumed.

Brent crude futures LCOc1 rose $0.03 to $64.6 a barrel. U.S. crude futures CLc1 gained $0.26 to $61.23 a barrel.

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