Despite a strong close from the US last Friday, European investors hesitated after the bell on Monday.
The FTSE 100 failed to celebrate the first step of the UK’s spring awakening, trickling 10 or so points lower, dropping to 6,730, while the pound was equally unenthused, flat against dollar and euro alike.
That same timidity had a green tinge to it in the Eurozone, where the CAC 40 and DAX were both up 0.2%, leaving the latter short of its 14,800-plus all-time highs.
This early reticence may be tied to the Archegos Capital situation. Friday saw significant losses for ViacomCBS Inc (NASDAQ:VIAC), Discovery Inc Class A (NASDAQ:DISCA), and a selection of Chinese tech stocks, without immediate explanation.
Over the weekend it was then revealed that a margin call-hit Archegos was behind the selling, leading to warnings of ‘significant’ losses from Credit Suisse Group AG (SIX:CSGN) and Nomura Holdings Inc (T:8604) on Monday morning.
It is unclear whether Archegos is done with its fire sales, and, if it isn’t, how much it has left to unload. That also raises questions over the wider ramifications of the hedge fund’s troubles, and which companies will be the next to announce they have been stung.
Reflecting the air of caution in Europe, the Dow Jones Industrial Average is currently heading for a 0.3%, or 115 point, decline when trading starts Stateside. That’d knock the index back below 33,000 and leave a record-high close to the month in peril.