FTSE makes lacklustre start as oil falls and the fallout from hedge fund fire sale continues

“An easing of restrictions in England failed to act as a catalyst for the FTSE 100 on Monday with the index trading modestly lower,” says AJ Bell Investment Director Russ Mould,

“There may be some nervousness in the markets off the back of crisis-hit hedge fund Archegos Capital and its fire sale of Chinese technology and US media stocks after being hit by margin calls.

“With both Credit Suisse and Nomura warning of a hit in the fallout from the saga, investors have been reminded of the interconnectedness of the global financial system and how this creates a risk of contagion when something goes wrong.

“Whether recent market volatility had any impact on the decision to trim the price range of takeaway firm Deliveroo’s IPO is doubtful.

“The news is delivered hot on the heels of some vocal pronouncements from high-profile fund managers that they would not be investing in the shares thanks to its reliance on gig economy workers.

“Elsewhere, oil prices fell as the container ship which was blocking the strategically important Suez Canal was re-floated. While this episode has provided Crude oil with a short-term boost, its resolution is drawing focus back to demand concerns as some optimism over global recovery hopes is dulled.

“A third wave of Covid-19 in Europe and the emergence of new strains of the disease is threatening to deflate the optimistic mood which had built up off the back of vaccine success.”

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