Markets mixed as Archegos fallout weighs

Markets were mixed on Monday.

The S&P 500 dipped 0.1 percent but the STOXX Europe 600 rose 0.2 percent and the Nikkei 225 rose 0.7 percent.

Nomura and Credit Suisse plunged after warning of major losses from lending to Archegos for equity derivatives trades. Archegos had been unable to meet banks’ calls for more collateral to secure equity swap trades they had partly financed, sparking a fire sale of stocks.

“This is the kind of thing that happens in a speculative environment. You start finding that things go wrong,” said Richard Bernstein, chief executive of Richard Bernstein Advisors.

However, other analysts remained sanguine over the risk to the overall market.

“While other funds may be caught in the mess, we fail to see how this specific car crash of a trade ends up propagating across the financial system via counterparty default,” Bespoke said.