Asian Stocks Up as Archegos Fallout Fears Ease, but Inflation Fears Rise

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Asian Stocks Up as Archegos Fallout Fears Ease, but Inflation Fears Rise

 Asia Pacific stocks were mostly up Tuesday morning, as investors continue to monitor further damage from Archegos Capital Management collapse .However, the quickening pace of both the U.S. economic recovery from COVID-19 and the vaccine rollout reignited inflation fears.

Japan’s nIKKEI 225 inched up 0.05% by 11:24 PM ET (3:24 AM GMT). Nomura Holdings Inc, who reportedly counts Archegos head Bill Hwang as a client, said it is too early to estimate the impact of losses tied to him.

South Korea’s KOSPI rose 1.09% while in Australia, the ASX 200- was down 0.58%.

Hong Kong’s Hang Seng Index  jumped 1.17%, as the city prepares to relax some of its strict restrictive measures even further from Apr. 1. Meanwhile, the National People’s Congress Standing Committee’s unanimous vote reduced the number of directly elected seats to Hong Kong’s Legislative Council, and a vetting body to determine who can stand for election will be created.

China’s Shanghai Composite was up 0.56% and the Shenzhen Component was up 1.06%. Investors look to the manufacturing and non manufacturing Purchasing Managers Indexes (PMIs) to be released on Wednesday, for further clues about the Chinese economic recovery.

Some traders demanded higher rates to hedge potential losses on the debt of banks caught up in the Archegos saga, including Nomura and Credit Suisse Group so far, and the company said via a statement that “all plans were being discussed.”

However, credit markets remained calm as the Asian session progressed on Tuesday.

“It’s never better when you are a shark in the water to be buying from a forced seller,” Spotlight Asset Group chief investment officer, Shana Sissel told Bloomberg. Sissel remains skeptical of the potential for broader market fallout from Archegos, adding, “I find it hard to believe that this would have a systemic massive impact on global markets beyond the few positions that they held.”

Mainland Chinese stocks were up by the early morning. The Shanghai Composite was up by 0.62% to 3,456.33. Hong Kong’s Hang Seng Index was up about 0.93% to 28,586.50.

Japan’s benchmark Nikkei average Nikkei 225 is trading up 0.16 percent at 29,432.97 on Tuesday, while the broader TOPIX  100 fell 0.64 percent to 1,277.47. South Korea’s Kospi was up by 1.12% to 3,070.00.

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