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Silver jumps, stocks slide as social trading roils market

Economy Jan 29, 2021 07:22PM ET
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2/2 © Reuters. A man wearing a protective mask, amid the coronavirus disease (COVID-19) outbreak, stands in front of an electric board showing Nikkei index outside a brokerage in Tokyo 2/2

By Herbert Lash and Carolyn Cohn

NEW YORK/LONDON (Reuters) - Silver prices jumped and global equity markets sank on Friday amid a growing battle on Wall Street between hedge funds and retail investors, while a dispute over COVID-19 vaccine supply in Europe cooled risk appetite.

Disappointing vaccine data from Johnson & Johnson (NYSE:JNJ) also hurt sentiment but the assault of retail traders using online forums to force hedge funds to reverse short positions - bets that stocks will fall - kept the market on edge.

Shares of GameStop Corp (NYSE:GME) and AMC Entertainment (NYSE:AMC) Holdings Inc surged again after Robinhood and Interactive Brokers (NASDAQ:IBKR) said they planned to ease restrictions after imposing buying halts on Thursday.

GameStop soared 67.9% to $325 a share, five times its closing price a week ago Friday, and AMC gained 53.7%, both in heavy trade. AMC was one of the most active stocks on the New York Stock Exchange. Volume on U.S. exchanges was 16.83 billion shares, up from the 10.6 billion average in the fourth quarter.

Silver rallied and was up 2% at $26.90 an ounce, taking gains to almost 10% since messages began to circulate on Reddit early Thursday urging retail investors to pile into the market and drive up prices.

Anxiety has grown as investors ask whether hedge funds will need to liquidate other positions to address losses in stocks they have shorted, said Michael Arone, chief investment strategist at State Street (NYSE:STT) Global Advisors in Boston.

"Once this short squeeze inevitably ends and there aren't any more greater fools to bid up these stocks, will retail investors get stuck holding the bag?" Arone asked.

"The unintended consequences of this potential volatility have markets on edge as we end the week," Arone said.

Arone added that investors need to take a giant step back as earnings are strong, the economy is improving, fiscal and monetary policy is supportive and vaccines are rolling out.

(Graphic: Hedge funds scrambling to exit shorts, cut losses: https://fingfx.thomsonreuters.com/gfx/buzz/azgpollxqvd/Pasted%20image%201611849789072.png)

MSCI's benchmark for global equity markets fell 1.82% to 642.57, while Europe's broad FTSEurofirst 300 index closed down 1.95% at 1,524.1 to post its worst weekly loss, at 3.3%, since October.

On Wall Street, the Dow Jones Industrial Average fell 2.03%, the S&P 500 lost 1.93% and the Nasdaq Composite dropped 2%. The three indexes suffered their biggest weekly fall since the end of October.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.1% to post a weekly loss of 4.4%. Japan's Nikkei fell 1.9%, recording its first weekly loss of the year.

VACCINE DISPUTE

Delays in COVID-19 vaccine production have snowballed into a spat between Britain, the European Union and drugmakers over how best to direct limited supplies.

AstraZeneca (NASDAQ:AZN) Plc offered eight million more doses of its COVID-19 vaccine to the European Union after it unexpectedly announced supply cuts last week. But the bloc said that was far short of what was originally promised, an EU official told Reuters on Friday.

New variants of the novel coronavirus have prolonged lockdowns and delayed expectations of an economic rebound.

Click here http://tmsnrt.rs/2EmTD6j for an interactive chart on the vaccine race.

The U.S. dollar retreated from its highest level since mid-November against the Japanese yen as investors rebalanced portfolios for month-end. The greenback slid 0.48% against the yen and traded little changed against an index of currencies, falling 0.002%.

Bitcoin jumped as much as 14% to a two-week high after Tesla (NASDAQ:TSLA) Inc chief Elon Musk tagged the cryptocurrency in his Twitter biography.

French 10-year government bond yields, which move inversely to price, rose four basis points after France's gross domestic product contracted less than expected in the fourth quarter of 2020.

U.S. Treasury yields rose, in line with those in Europe, after data showed inflation perked up last month, while employment costs rose, suggesting the world's largest economy is on the mend from the devastating effects of the pandemic.

The U.S. yield curve steepened as long yields increased, with the spread between 2-year and 10-year notes hitting 98.20 basis points, the widest in about a week.

The 10-year U.S. Treasury note rose 2.1 basis points to yield 1.0757%.

Oil prices traded mixed as demand concerns caused by new coronavirus variants and slow vaccine rollouts offset a cut in Saudi Arabian oil supply and falling U.S. oil inventories.

Brent crude futures settled up 35 cents at $55.88 a barrel. U.S. crude futures fell 14 cents to settle at $52.20 a barrel.

Spot gold prices rose 0.16% to $1,843.31 an ounce. U.S. gold futures settled up 0.5% to $1,850.30 an ounce.

Silver jumps, stocks slide as social trading roils market
 

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Comments (14)
Tommi Nuutinen
Tommi Nuutinen Jan 30, 2021 1:11AM ET
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hmmm...silver could jump hugely ....🤔
Unoqueva Alguno
Unoqueva Alguno Jan 29, 2021 2:05AM ET
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the funniest part of the story is when a marker analyst says that this is wrong because it is "driven by fundamentals."
Unoqueva Alguno
Unoqueva Alguno Jan 29, 2021 2:05AM ET
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* not
perplexed76 .
perplexed76 . Jan 29, 2021 1:54AM ET
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the market gamblers became nervous. They are ready for "mayday we too big to fall !!!"
Brian Dodge
Brian Dodge Jan 29, 2021 1:44AM ET
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retail didn't fray the nerves. the obvious market interference certainly did.
Robert Egan
Robert Egan Jan 29, 2021 1:39AM ET
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trading frenzy? or corruption catching?
Art Fire
Art Fire Jan 29, 2021 1:26AM ET
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always find new excuses. The truth they are addicted to american tax payer cheap and easy money.
Joanna Yin
Joanna Yin Jan 29, 2021 1:12AM ET
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2008 Lehman ~ 2021 RobinHood
Yordan Ganchev
Yordan Ganchev Jan 29, 2021 12:48AM ET
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#RobinhoodAppNotRobinhoodAct
Robert Nchor
Robert Nchor Jan 29, 2021 12:37AM ET
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The title should be “wall street manipulators running for cover after retail investers found a way to win stock trade” lol
Stacy Starner
Stacy Starner Jan 29, 2021 12:37AM ET
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And its going to continue trust me. $100,000 thanks hedgers im going to use my profit and do it again
Luis Parola
Luis Parola Jan 29, 2021 12:37AM ET
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come to amc
Casino Crypt
CasinoCrypt Jan 28, 2021 10:59PM ET
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House of cards. Bad news = market rising. Good news = market rising. Investors ignore reality and as we all know hope is the ultimate ****
Casino Crypt
CasinoCrypt Jan 28, 2021 10:59PM ET
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hope is the ultimate ki_11_e_r
Jeremy Gautier
Jeremy Gautier Jan 28, 2021 10:59PM ET
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No, it's rising cause money printing. It is not the market which up. It is the money value wich is going down :) all is ok
Gamer Turtle
GamerTurtle Jan 28, 2021 10:59PM ET
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Jeremy Gautier  correct, it's part of asset bubble due to value of dollar. Since 2008 crisis, supply of money has gone up across the globe so asset has to be valued differently, inflation is fine in essential needs but in asset such as stock & housing is different story. when we print trillions a year, the money gotta go somewhere to make their investment profitable, it lands in asset.
 
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