US equities retreat after block sales by hedge fun
US equity futures tumbled as the market reacted to the recent block sale of shares by Archegos Capital, a private home office. Last week, the firm sold billions worth of shares of companies like ViacomCBS, Discovery, and several Chinese companies like Tencent Music and Alibaba. In total, the fund sold shares worth more than $33 billion, prompting margin calls for many short sellers. Archegos is a firm led by Bill Hwang, a protege of the legendary Julian Robertson, founder of Tiger Global. Analysts expect that the sell-off will continue later today as many large investors book profits. Futures tied to the Dow Jones, S&P 500, and Nasdaq 100 declined by more than 0.50%.
The price of crude oil declined slightly even as the crisis in Suez Canal continued. During the weekend, salvage companies scrambled to free The Ever Given ship that has been stuck at the canal. This has led to substantial shipping delays while many shipping companies have refused to take new orders. Others have decided to reroute their ships around Africa. With the backlog building, there is a possibility that there will be an oil shortage in many countries leading to high oil prices. The price of Brent and West Texas Intermediate (WTI) declined to $63.85 and $60.25, respectively.
In the United States, the Joe Biden administration is confident that it can pass the $3 trillion infrastructure spending bill. The bill will include funds for roads and bridges and other climate-related bills. It will also likely lead to the overheating of the American economy and ultimately lead to stagflation (slow economic growth and relatively high unemployment). Meanwhile, the economic calendar will not have any significant events today. The only notable ones are the Nationwide house price index (HPI) and the UK mortgage approvals and lending.
The XBR/USD pair declined to an intraday low of 63.52, which is slightly lower than Friday’s high of 64.67. On the 30-minute chart, the price has also moved slightly below the 25-day exponential moving averages (EMA) while the Relative Strength Index (RSI) has moved from the overbought level. The Average True Range (ATR) has also declined. The price also seems to have formed a triple-top pattern at last week’s high of 64.67. Therefore, it might keep falling as bears target the next key support at 64.00.
The EUR/USD was little changed during the Asian session. It is trading at 1.1787, which is slightly below Thursday’s high of 1.1800. On the hourly chart, the pair has formed a small ascending yellow channel that looks like a bearish flag pattern. It is also at the same level as the 25-day and 15-day moving averages while the RSI is at the neutral level of 50. The pair is likely to break-out lower later today or in the next few days.
The GBP/USD pair is little changed ahead of important housing data from the UK. On the hourly chart, the pair is slightly below the important resistance level at 1.3813, which was the lowest level on March 13. The pair is also at the same level as the 25-day moving average while the awesome oscillator has started to drop. The pair may keep falling as bears target the next support at 1.3700.