US futures slide as investors assess Archegos share sale damage
The price of crude oil rose even after salvage experts made progress in rescuing The Ever Given ship at the Suez Canal. According to the Suez Canal Authority, they managed to refloat parts of the ship. This means that the entire ship could be freed in the next few days and reopen one of the busiest trade routes in the world. Still, it will take a considerable amount of time to clear the backlog of more than 300 ships that are waiting to cross. Oil prices also rose ahead of the OPEC+ meeting scheduled for later this week.
US futures declined sharply as investors continued to watch the ongoing liquidation of Archegos hedge fund. The multi-billion-dollar fund was forced to liquidate billions of shares in companies like ViacomCBS and Discovery to fund margin calls by companies like Credit Suisse and Nomura. Today, shares of the two banks dropped by more than 10%. Still, some analysts believe that stocks will recover as investors reflect on the cause of Friday’s rout. Dow Jones and S&P 500 futures dropped by more than 0.40%. The S&P 500 VIX index rose by more than 6%.
The British pound rose sharply as the UK heads towards reopening. In a speech to Conservative lawmakers during the weekend, he said that the ongoing vaccination drive will lead the country to reopen in the next few weeks. The pound also reacted to the latest mortgage lending data from the UK. Numbers by the Bank of England showed that the overall mortgage lending increased from more than 5.17 billion pounds in January to 6.20 billion in February. This happened even as the number of approvals fell from 98.99k to 87.7k.
The GBP/USD jumped today as investors gained more confidence in the UK economy. It rose to 1.3835, which was the highest level since March 24. On the hourly chart, the price managed to move above the important resistance level at 1.3813. It is also above the short and medium-term moving averages while oscillators have kept rising. Therefore, the pair may keep rising as bulls target the next key resistance at 1.3900.
The EUR/USD pair declined to an intraday low of 1.1762 because of the overall dollar strength. On the four-hour chart, the price has moved below the short and longer-term moving averages while the Relative Strength Index (RSI) is close to the oversold level. The average true range (ATR) has also continued to drop. The pair may keep falling as investors target the next key support at 1.1740.
The DAX index rallied to €14,820, as the market remained optimistic about the EU recovery. On the four-hour chart, the index has moved above the important resistance level of €14,173. It is also above the short and longer-term moving averages while the MACD is above the neutral level. While the index may keep rising, an end-of-quarter pullback is possible.