Stocks futures slide as banks warn of significant losses tied to hedge fund's liquidation

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U.S. stock futures were lower Monday as banks were left licking their wounds after a large hedge fund was forced to unwind billions of dollars in positions.

Dow Jones Industrial Average futures were lower by 109 points, or 0.33%, while S&P 500 futures and Nasdaq futures were weaker by 0.28% and 0.04%, respectively.

The hedge fund Archegos Capital Management was on Friday forced to sell nearly $30 billion of holdings of U.S. media stocks and Chinese internet ADRs after facing margin calls on heavily leveraged positions.

The fire sale caused significant losses in ViacomCBS and Discovery Inc., as well as Baidu Inc. and Tencent Holdings, among others.

The impact is now being felt at investment firms Credit Suisse Group AG and Nomura Holdings, which are warning of significant losses tied to the selling of Archegos’ positions.

Dow components JPMorgan Chase & Co. and Goldman Sachs Group Inc. were among the laggards due to fallout from the selling and as easing of longer-dated bond yields flattened the yield curve.

Elsewhere, Boeing Co. provided support to the Dow after receiving an order from Southwest Airlines Co. for 100 737 Max 7 jets, which will begin being delivered in 2022. The deal includes an option for Southwest to purchase an additional 155 Max jets through 2031.

Visa Inc. launched a pilot program that will allow customers to settle transactions using the cryptocurrency USD Coin, a stablecoin pegged directly to the U.S. dollar.

In commodities, West Texas Intermediate crude oil climbed 49 cents to $61.46 per barrel as the Ever Given container ship was refloated in the Suez Canal. Elsewhere, gold fell $7.70 to $1,727 per ounce.


Overseas markets were broadly higher.

France’s CAC 40 paced the advance in Europe, trading up 0.48%, while Germany’s DAX 30 rose 0.46% and Britain’s FTSE 100 was little changed.

In Asia, Hong Kong’s Hang Seng index edged up 0.01%, China’s Shanghai Composite advanced 0.5% and Japan’s Nikkei 225 climbed 0.71%.

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