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Sunday, April 11, 2021

FTSE 100 set to rise as fallout from Archegos fund explosion abates

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The Archegos hedge fund in the United States was forced to sell a series of stocks after being surprised by too much debt after the stock plummet last week.

Archegos had made “leveraged” bets, that is, when traders use their capital to buy stocks and borrow money to buy more. If stocks rise, they make more money with their original capital, but if they fall too much, the lending broker may worry about their exposure and ask the investor to pay off some of the debt.

This demand is known as a margin call and may mean that traders have to sell other stocks to honor it.

CMC Markets said the Dax index in Germany is expected to rise from 70 to 14,887 and the CAC of 50 in France from 20 to 6,035.

Traders said the looming end of the month and quarter could lead to more volatility as traders try to square their positions before countdowns and performance metrics are taken.

Banks, especially Credit Suisse, will have lost money but are much better capitalized today than they were during the last financial crisis, Madden pointed out, suggesting that economic recovery likely this year should allow them to earn enough money to counter Archegos’ blow. .

This could have an impact on BP and Shell and slow down part of the recovery of the oil-heavy FTSE 100.

Broker Numis reported extremely strong earnings in a trading release that could boost fellow brokers today. Numis said revenue for the first half of its fiscal year would reach £ 110million – up more than 75% from the same period a year ago and ‘comfortably ahead’ of the record performance of the second semester of last year.

Numis has been a big winner in the Covid emergency fundraisers that many companies have had to go through during the pandemic, but in the current semester it will even beat that performance as the market rally sparked a wave of IPOs that proved to be lucrative work for him.

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