* S&P 500 futures, European stocks drop 1.5%
* Dollar Index sees weekly earnings
* Asian stocks fall weekly
* Chinese short-term rates rise when liquidity is tight
By Carolyn Cohn
LONDON, January 29th (Reuters). European stocks and US stock futures fell on Friday and the safe haven dollar looked like a weekly gain as a hedge fund-retail battle on Wall Street and a dispute in Europe over COVID-19 Vaccine deliver chilled risk appetite.
Wall Street has been gripped by a coordinated assault of small traders organized through online forums like Reddit to force hedge funds to reverse short positions – or bets that stocks would fall – on companies like GameStop and AMC Entertainment.
The attack comes after central bank and government incentives pushed stock markets to record highs and encouraged buying by retail investors.
“The GameStop saga is ending, leaving a sour taste in the mouths of policymakers,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
“The story could spark action that could lead the government and central bank to revise their ultra-loose policies that dump liquidity in the middle rather than toward a reasonable goal.”
Brokers have cut off credit facilities and restricted trading in some of the hottest names overnight, lowering their prices.
The head of popular online broker Robinhood said the curbs had been put in place to protect the broker and its customers, but some restrictions would be lifted on Friday.
The S&P 500 futures fell 1.5% and the Nasdaq 100 futures fell 1.8%. This was more than a reversal of gains posted on Thursday when the earnings season got off to a strong start.
The UK’s FTSE 100 index fell 1.7% in its worst week since October. European stocks fell 1.5%.
VACCINE LINE
Delays in the manufacture of COVID-19 vaccines have sparked a dispute between the UK, the European Union and drug manufacturers over how best to manage limited supplies.
Europe’s struggle to secure vaccines intensified on Thursday as the EU warned pharmaceutical companies not to use all legal means or even block exports unless they were ready to fire the promised shots.
Former British vaccine chief Kate Bingham said Friday she doesn’t think the EU would block exports.
New variants of the novel coronavirus have also extended lockdowns and delayed expectations of an economic recovery.
“The pandemic continues to cast a dark shadow and the timing of an economic or social recovery remains unclear,” said Richard Hunter, market leader at Interactive Investor.
Click here http://tmsnrt.rs/2EmTD6j for an interactive table on the vaccine race
The US dollar rose to a seven-week high against the yen and gained 0.2% against a currency index, up 0.6% weekly. The euro fell 0.12% and the pound 0.3%.
The yields on German 10-year government bonds rose by one basis point.
World stocks fell 0.5% to three-week lows set in the previous meeting.
MSCI’s broadest index for stocks in the Asia-Pacific region outside Japan fell 1.1%, heading for a weekly loss of 4.4%. The Japanese Nikkei fell 1.9%, posting its first weekly loss of the year.
Meanwhile, the People’s Bank of China (PBOC) injected 100 billion yuan into the financial system on Friday after a week of liquidity cuts, raising concerns that the central bank was actually tightening monetary policy.
However, the extra money did little to ease short-term money markets, where interest rates rose for a fifth straight day and benchmark repo rates rose overnight to their highest level in nearly six years.
Oil prices remained stable and stayed in the ranges seen for the past three weeks, with stalled vaccine launches limiting the upward momentum.
Brent crude oil futures rose 0.1% to $ 55.58 a barrel, and US crude oil futures fell 0.27% to $ 52.20 a barrel.
(Additional reporting by Tom Westbrook in Singapore and Alwyn Scott in New York; editing by Richard Pullin, Ana Nicolaci da Costa and William Maclean)
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This article originally appeared on finance.yahoo.com
