Market Commentary — April 5, 2021
In a holiday-shortened trading week, the S&P 500 made news on Thursday surpassing 4,000 for the first time. Select tech shares rallied last week as well, helped by semis and hardware stocks and a bounce in Facebook. In yet another market reversal, growth shares outpaced value for the first time since January.
There continue to be ripple effects from the previous week’s implosion of the Archegos Capital hedge fund. Having suffered steep losses in holdings of U.S. and Chinese media and internet firms, Archegos was forced to liquidate large positions in other widely held names through discounted “block trades ” that drove those share prices lower.
Also in the fallout, many major global banks that had participated in so-called swap trades with Archegos warned investors they has sustained major losses totaling the billions.
Here is the tally so far: Nomura – $2 billion, Credit Suisse – as much as $5 billion, Mitsubishi UFJ – $300 million, JP Morgan – $10 billion, Mizuho Financial Group – $90 million.
Goldman and Morgan Stanley avoided a material financial impact by sprinting to the exits and Deutsche Bank was also able to de-risk its exposure without incurring significant losses.
And for those discounting investor appetite for technology themes and Cathie Woods’ investment prowess, Ark’s new ETF, the Ark Space Exploration and Innovation Fund (ARXX), attracted $280 million on its debut according to Bloomberg Intelligence.
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