US stocks were set to open sharply lower, with theGameStop frenzy hitting market confidence.- GameStop was up as much as 96% in pre-market as Robinhood said some trading could resume.
- Analysts said the hit to hedge funds had caused a change in 'market structure'.
US stocks were set to fall sharply at the opening bell on Friday as the GameStop saga combined with worries over coronavirus and the global recovery to dent market confidence.
$4 were down 0.89%, $4 were off by 1.18% and $4 fell 0.8%. The $4 rose as investors moved towards safer assets.
Stocks fell again in Asia overnight to cement some of the biggest weekly losses since September as a rise in Chinese borrowing costs and coronavirus cases unnerved investors. China's $4 slipped 0.47%, Hong Kong's $4 fell 0.94% and Japan's $4 slid 1.89%.
European shares opened deep in the red, with the continent-wide $4 falling 1% and the UK's $4 slipping 0.86%.
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The attention of
Its shares have rocketed more than 300% over the last 5 days after members of the Reddit forum Wall Street Bets decided to pile into the stock. This has caused $4 such as Melvin Capital who were shorting - that is, betting against - the company's shares.
Yesterday, the day traders' go-to app $4 in GameStop and other popular companies such as AMC, Bed Bath & Beyond and BlackBerry, saying it was too volatile. The move prompted outrage from amateur investors and a rare show of bi-partisanship as $4 they said was designed to help Wall Street firms who were being hammered.
$4 ended the day 44.29% lower at $193.60 after trading was curbed. But they were up as much as 96% in volatile pre-market trading after Robinhood and others said they would $4.
Jim Reid of Deutsche Bank said the phenomenon was one of the most "crazy" things he had seen in 25 years in finance. "It's shaken up the system and there will be some permanent changes to the ways investors, especially hedge funds and retail, act."
US stocks finished in the green yesterday as investors bet on more fiscal stimulus after $4, but analysts said Wall Street had taken notice.
Mike Wilson, chief US equity strategist at Morgan Stanley, $4 that there had been a "change in the market structure".
"A lot of these heavily shorted stocks running up, interesting moves that are creating some pain for certain investors, and that always leads to some de-grossing, and we're seeing that now."
Richard Hunter, chief market analyst at trading platform Interactive Investor, said he thought the Reddit saga "may not be enough to move markets per se, but it nonetheless adds to the current feeling of market malaise".
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The $4 rose 0.21% on Friday to 90.66 as investors bought up the safe-haven asset as stock futures fell.
Oil prices rose despite the wider gloom, with $4 up 0.31% to $55.27 a barrel although $4 was flat at $52.34 a barrel.
US bonds fell slightly, with the yield on the 10-year Treasury note rising 1.1 basis points to 1.065%. Yields move inversely to price.
Worries about vaccines and the economy have also hit stocks and helped the dollar over the last week. Joe Biden's administration has pledged to speed up the vaccination drive as states complain of shortages. In Europe a spat between the EU and AstraZeneca has broken out over vaccine delivery.
Meanwhile, figures showed the US economy shrank at its fastest pace since World War II in 2020, and many countries are still under tight lockdowns.