By Barbara Kollmeyer
European stocks and U.S. equity futures fell sharply on Friday, at the end of a volatile week fueled by COVID-19 worries and a Wall Street battle between retail investors and hedge funds over shorted stocks.
The Stoxx Europe 600 index /zigman2/quotes/210599654/delayed XX:SXXP -0.54% fell 1.2% after a modest move up on Thursday. Down around 2.8% for the week, the index is facing its worst weekly performance since late October 2020. Elsewhere, the German DAX /zigman2/quotes/210597999/delayed DX:DAX -0.64% fell 1.2%, the French CAC 40 /zigman2/quotes/210597958/delayed FR:PX1 -0.71% dropped 1.3%, and the FTSE 100 index /zigman2/quotes/210598409/delayed UK:UKX -0.42% slid 1.1%.
Dow futures /zigman2/quotes/210407078/delayed YM00 -0.07% fell close to 300 points, while S&P 500 /zigman2/quotes/209948968/delayed ES00 -0.0023% and Nasdaq-100 futures /zigman2/quotes/210219788/delayed NQ00 -0.07% dropped around 1% each. Those losses were set to reverse Thursday’s gains on Wall Street that were driven by earnings reports and upbeat economic data.
Losses were setting up for Friday as volatility, fueled by frenzied trading among U.S. retail investors who have been clashing with hedge funds holding short positions of certain stocks, looked set to continue on Friday.
Shares of videogames retailer GameStop /zigman2/quotes/203755179/composite GME -2.94% and other companies that have been in the crosshairs of those battles tumbled on Thursday, as brokerages such as Robinhood froze trading. Those shares surged in after-hours action as the online platform, which came under criticism for its move, said it would “allow limited buys” of those volatile stocks on Friday.
U.S. retail action inspired sharp moves for some of Europe’s own shorted stocks, such as German drug company Evotec /zigman2/quotes/200798424/delayed XE:EVT -2.70% and movie-theater chain Cineworld /zigman2/quotes/206525056/delayed UK:CINE -1.26% . Both stocks have seen gains of around 14% week to date.
Elsewhere, pandemic concerns continue to weigh on investors. A bright spot for markets came amid news that a COVID-19 vaccine study by U.S. vaccine developer Novavax /zigman2/quotes/202614340/composite NVAX -7.42% showed 89% efficacy in the U.K. , though it was less effective against the new South African variant.
While the U.K. has been pushing ahead with its vaccine rollout, Europe is facing delays on its own program from drug companies AstraZeneca /zigman2/quotes/200304487/composite AZN +1.18% /zigman2/quotes/203048482/delayed UK:AZN -0.47% and Pfizer /zigman2/quotes/202877789/composite PFE +0.69% /zigman2/quotes/203243414/delayed UK:0Q1N 0.00% , due to issues at European plants.
Germany has warned of 10 weeks of shortages, and Chancellor Angela Merkel reportedly plans to meet with regional leaders in Germany and drug manufacturers to discuss the crisis. The EU has demanded AstraZeneca diverts supplies being produced in the U.K. to the region to help the shortfall.
Pandemic woes were reflected in data that revealed a tough end to 2020 as lockdowns and restrictions were beefed up. French gross domestic product fell 1.3% during the fourth quarter.
The pain was showing up elsewhere, as shares of Hennes & Mauritz /zigman2/quotes/208522175/delayed SE:HM.B -1.25% fell 2%, after the Swedish fashion retailer said a strong recovery at the start of its fiscal fourth quarter significantly slowed after fresh restrictions and lockdowns were imposed to combat the second wave of COVID-19.
Shares of SAP /zigman2/quotes/202053813/delayed XE:SAP +1.04% dropped 1%, after the German software group said fourth-quarter net profit fell year-over-year , as it confirmed pre-announced declines in operating profit and revenue.
Shares of BBVA /zigman2/quotes/204078760/composite BBVA +0.16% /zigman2/quotes/209653399/delayed ES:BBVA -0.68% fell 2%, even after the Spanish bank said it plans to launch a buyback of about 10% of its shares. BBVA is selling its U.S. business, which should give it around €8.5 billion ($10.30 billion) in capital to boost growth and remunerate shareholders.
Elsewhere, shares of rival lender CaixaBank /zigman2/quotes/203420110/delayed ES:CABK -0.04% climbed 3%, after it reported a rise in fourth-quarter net profit and the board proposed a dividend for 2020.
Shares of Givaudan /zigman2/quotes/209204101/delayed CH:GIVN +1.06% dropped 2%, as the Swiss flavor-and-fragrance group said it would lift its dividend after reporting a rise in profit and reaching its targets.
German automobile maker Daimler /zigman2/quotes/201850364/delayed XE:DAI -1.91% late on Thursday reported preliminary earnings for financial year 2020 that beat its own guidance and consensus. Those shares rose 1.8%.