GLOBAL MARKETS-Asia shares set to rise as broader worries about hedge fund default ease

By Alwyn Scott
NEW YORK, March 29 (Reuters) - Asian shares were set to open
higher on Tuesday as investors shook off earlier worries about a
hedge fund default that roiled global banking stocks overnight,
while rekindled concerns about inflation pushed bond yields
higher.
The firmer tone in Asia comes as 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. Nomura 8604.T and Credit Suisse CSGN.S are facing
billions of dollars in losses and regulatory scrutiny after a
U.S. investment firm, named by sources as Archegos Capital,
defaulted on equity derivative bets, putting investors on edge
about who else might be exposed. Shares in Nomura and Credit
Suisse declined 16.3% and 13.8%, respectively, on Monday.
In early Asian trade, however, Australian S&P/ASX 200
futures YAPcm1 were up 0.44% and Japan's Nikkei 225 futures
NKc1 had advanced 0.86%.
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 dollar gained on safe-haven buying, while bond
prices came under pressure as the outlook for economic growth
raised the specter of inflation, he added.
Benchmark 10-year yields US10YT=RR rose to a session high
of 1.728% in the U.S. after the state of New York on Monday
announced people aged 30 and older could get coronavirus
vaccinations starting March 30. Crude prices inched up on a report that Russia would back
broadly stable oil output when the Organization of the Petroleum
Exporting Countries and allies meet this week. Futures had earlier fallen on news that a container ship in
the Suez Canal blocking traffic for nearly a week had been
refloated, bringing some relief to concerns about a supply
blockage.
Optimism about speedy vaccinations, the record U.S.
stimulus, and robust estimates for upcoming earnings, drove the
Dow and the S&P 500 to record closing highs last week.
On Wall Street, the Dow Jones Industrial Average .DJI rose
0.3%, the S&P 500 .SPX lost 0.09% and the Nasdaq Composite
.IXIC dropped 0.6%.
The KBW Nasdaq Bank stock index .BKX ended 2.3% lower
after falling nearly 3.5% during the session. "There's still chatter as to whether or not, and which,
American banks may be affected," said Quincy Krosby, chief
market strategist at Prudential Financial in Newark, New Jersey.
"That is a question that's lurking. But so far the market has
taken (the news) in stride essentially."

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