Asia shares mixed as broader worries about US hedge fund default ease

Mainland China's CSI300 index is 0.18 per cent higher in early trade, while Japan's Nikkei is off 0.1 per cent. PHOTO: REUTERS

NEW YORK (REUTERS) - Asian shares were mixed early on Tuesday (March 30) as global investors shook off worries about a hedge fund default that roiled global banking stocks overnight, while rekindled concerns about inflation pushed bond yields higher.

Wall Street pared earlier losses driven by the banking sector on fears that issues with a defaulting hedge fund could spread throughout the banking sector.

In Asia, the MSCI's broadest index of Asia-Pacific shares outside Japan was marginally higher by 0.08 per cent early in the session on Tuesday.

Hong Kong's Hang Seng Index was up 0.36 per cent to 28,440, but in Australia a weaker tone emerged when the S&P/ASX200 slid 0.4 per cent to its lowest point for a week.

Mainland China's CSI300 index is 0.18 per cent higher in early trade, while Japan's Nikkei is off 0.1 per cent.

Singapore's Straits Times Index was up 0.6 per cent at 10.41am local time.

Nomura and Credit Suisse are facing billions of dollars in losses and regulatory scrutiny after a United States investment firm, named by sources as Archegos Capital, defaulted on equity derivative bets, putting investors on edge about who else might be exposed.

Nomura shares were down a further 2.49 per cent on Tuesday, after dropping by as much as 16 per cent on Monday when it revealed it could take a US$2 billion (S$2.7 billion) loss from the hedge fund fallout.

Mr Michael McCarthy, chief markets strategist at CMC Markets, said the worries "are very specific to a small number of hedge funds". He said he did not expect any systemic fallout.

Still, the US dollar gained on safe-haven buying, while bond prices came under pressure as the outlook for economic growth raised the spectre of inflation, he added.

Citigroup equity derivative solutions director Elizabeth Tian said investor sentiment was still closely tied to the pace of the global vaccine rollout.

"Investors will also be watching the number of Covid-19 cases as rises in Western Europe and the Philippines see the return of renewed restrictions, while vaccination attempts threaten to stall amidst supply constraints and vaccine nationalism," Ms Tian said.

"While restrictions are increased in Europe, the UK will be relaxing stay-at-home rules," she added.

During the Asian session, benchmark 10-year yields hit 1.7321 per cent, up 1.4 basis points, after trading marginally higher in the US following the state of New York's announcement on Monday that people aged 30 and older could get coronavirus vaccinations starting on March 30.

Crude prices inched up on a report that Russia would back broadly stable oil output when the Organisation of the Petroleum Exporting Countries and allies meet this week.

On Wall Street, the Dow Jones Industrial Average rose 0.3 per cent, the S&P 500 lost 0.09 per cent and the Nasdaq Composite dropped 0.6 per cent.

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