By Geoffrey Smith
Investing.com -- GameStop and other heavily-shorted stocks rise as brokerages lift restrictions on trading. Elon Musk gives Bitcoin another boost; Caterpillar , Eli Lilly and Chevron report earnings; GDP in the Eurozone beats expectations, and oil is set to end the week flat. Here’s what you need to know in financial markets on Friday, January 29th.
1. Revenge of the meme stocks
Meme stocks – the handful of heavily-shorted names that have been targeted for squeezing by thousands of retail traders – all surged in premarket trading, after Robinhood and other brokerages said they would lift restrictions on trading the stocks.
Robinhood had stopped all buying of GameStop on Thursday, while a handful of brokerages had sharply jacked up margin requirements or limited options trading in GameStop and others.
By 6:30 AM ET (1130 GMT), GameStop (NYSE:GME) stock was indicated up 98% while AMC Entertainment (NYSE:AMC) was up 53% and BlackBerry Ltd (NYSE:BB) stock was up 17%. All three had scored big losses on Thursday after the brokerages restricted trading.
2. Musk boosts Bitcoin
Bitcoin surged 16% to $36,905 as of 6:30 AM ET after – wait for it – Elon Musk added the word to his Twitter biography.
The entrepreneur has repeatedly tweeted about the digital currency in recent months, most often expressing an intellectual fascination with the concept hedged by caution. In one tweet he pictured himself as a monk at prayer struggling to banish the thought of Bitcoin, depicted as a sexual temptation.
Froth and speculation were alive and well elsewhere in the crypto universe, with the latest fad Dogecoin more than tripling and Ethereum heading back to its all-time high with a gain of nearly 8% against the dollar.
3. Stocks set to open lower; Chevron, Caterpillar earnings due
U.S. stock markets are set to open clearly lower again, amid expectations that hedge funds will again be forced to liquidate long positions in order to meet margin calls on shorts that are again being squeezed by retail traders.
By 6:30 AM ET, Dow Jones Futures were down 177 points, or 0.6%, while S&P 500 Futures were down 0.7%. NASDAQ Futures were down 0.9%.
The earnings and economic calendars are both heavy again, with Eli Lilly (NYSE:LLY) and Caterpillar (NYSE:CAT) already reporting big beats versus expectations. Chevron (NYSE:CVX), Honeywell (NYSE:HON), Charter Communications (NASDAQ:CHTR) and Colgate-Palmolive (NYSE:CL) are all due to report in the course of the day.
Datawise, the main focus will be on personal income and personal spending data for December at 8:30 AM ET, while the Michigan Consumer Sentiment survey is due at 10 AM ET.
4. Eurozone states publish upbeat GDP data
The Eurozone economy may have shrunk less than estimated in the fourth quarter, according to releases from some of its bigger member states on Friday.
Germany’s gross domestic product rose by 0.1% in the quarter, a little better than the stagnation implicit in the country’s earlier estimate for 2020 as a whole. French GDP fell by 1.3%, much less than the 4% drop expected, while Spanish GDP actually grew 0.6%, defying widespread expectations for a contraction. Austria’s GDP did live down to expectations, with the disruption of the ski season leading to a 4.3% drop.
There were also better-than-expected releases for German joblessness in January, which fell by 41,000.
5 Oil steady, anticipating Saudi cut
Crude oil prices are set to end the week roughly where they started it, as the main benchmarks rose in anticipation of a cut in Saudi Arabian output from next month.
Saudi has pledged to cut 1 million barrels a day from its output for the next two months. But, after having raised its official selling prices sharply for February, it is expected to cut them for March, according to a Reuters report.
By 6:45 AM ET, Crude futures were up 0.6% at $52.62 a barrel, while Brent was up 0.9% at $55.61 a barrel.
Baker Hughes will release its latest weekly rig count later, while the CFTC will put out weekly numbers on net commitments of traders.