MILAN / SYDNEY – Wall Street’s main indexes eased on Monday after a surge in the previous session, as global banks said they faced potential losses from a hedge fund’s default on margin calls.

Nomura and Credit Suisse warned of losses after the US hedge fund, named by sources as Archegos Capital, defaulted, hitting shares in some big media and Chinese technology companies.

Shares in Morgan Stanley fell about 3 percent after the Financial Times reported it had also sold billions of shares, while Bank of America Corp, Citigroup Inc, JPMorgan Chase & Co, Goldman Sachs and Wells Fargo & Co dropped between 0.3 percent and 2.7 percent.

The news has raised concerns about whether the full extent of Archegos’ apparent wipeout has been realized or whether there was more selling to come from other lenders.

Nomura still has positions to unwind, Bloomberg reported, citing a Japan government official.

At 10:04 a.m. ET, the Dow Jones Industrial Average was up 16.14 points, or 0.05 percent, at 33,089.02, the S&P 500 was down 16.75 points, or 0.42 percent, at 3,957.79, and the Nasdaq Composite was down 102.09 points, or 0.78 percent, at 13,036.64.

Developments in the Suez Canal however raised hopes that the vital waterway could reopen and ease global shipping backlogs, sending oil prices lower and offering support to stocks.

The MSCI world equity index, which tracks shares in 49 countries, was just above parity by 0809 GMT, while US and euro zone volatility gauges picked up from last week’s lows.

After a mixed performance in Asia overnight, European shares were flat in morning deals, while stock futures pointed to a 0.6 percent decline for Wall Street later in the day.

“Equity investors are apparently on edge after reports of forced liquidations by hedge fund called Archegos Capital,” said AFS analyst Arne Petimezas in Amsterdam.

“However, in our universe of bonds and money markets and FX, investors aren’t batting an eyelash,” he added in a note.

Credit Suisse shares were set for their worst day in one year, down 13 percent, while Nomura fell 16 percent in its largest drop on record, limiting gains for Japanese shares.

Markets were also looking to President Joe Biden to outline his infrastructure spending plans this week, which could supercharge an already accelerating US recovery.

“We expect the global economy to expand robustly at 6.4 percent this year, fuelled by a large US fiscal stimulus, with positive spillovers for the rest of the world,” said Barclays economist Christian Keller in London.

“Rising inflation over the coming months should be transitory, and core central banks seem committed to looking through it,” he added.

The prospect of faster US economic growth has spurred speculation of rising inflation and weighed on Treasury prices.

Yields on US 10-year notes eased a touch on to 1.648 percent, but were not far from the recent 13-month top of 1.754 percent.

European yields have been restrained by active buying from the European Central Bank, widening the dollar’s yield advantage over the euro. The single currency was last little changed at US$1.179, just above a five-month low hit last week.

The dollar index dipped 0.05 percent at 92.739, after reaching its highest since mid-November last week.

The lift in yields has weighed on gold, which offers no fixed return. Spot gold was down 0.3 percent at US$1,726 an ounce.

Oil prices eased as markets bet the refloating of the Ever Given would allow tankers to use the waterway again. There were over 300 vessels waiting to pass through the shipping route which accounts for 12 percent of global trade.

The market will also be cautious ahead of an OPEC meeting this week, which will have to decide whether to extend supply limits, or loosen the spigots.

Brent fell 0.9 percent to US$63.99 a barrel, while US crude lost 1.4 percent to US$60.15 per barrel.