European Stock Futures Lower; Uncertainty over Populist Movement

European stock markets are seen opening sharply lower Friday, with investors cutting positions given the uncertainty surrounding the populist trading movement.

At 2:05 AM ET (0705 GMT), the DAX futures contract in Germany traded 0.5% lower, CAC 40 futures in France dropped 1% and the FTSE 100 futures contract in the U.K. fell 0.9%.

Global stocks are set for their worst weekly slide in about three months, partly on the turmoil caused by small traders organising over online forums, such as Reddit, to force hedge funds to reverse short positions on a series of stocks. This has resulted in these funds dumping other equity holdings in order to raise liquidity.

Retail traders had their trading ability restricted for a time Thursday as brokers, including popular online broker Robinhood, cut off their borrowing and restricted trading in some of the companies in the spotlight, such as GameStop (NYSE:GME) and AMC Entertainment (NYSE:AMC).

However, Robinhood has since stated that some restrictions will be lifted on Friday, raising fears that the volatility will resume as the week draws to an end.

This added to concerns about the slow rollout of vaccines in continental Europe, a region hard hit by the Covid-19 virus, which has culminated in a spat between the European Union and drugmakers over the distribution of limited supplies.

There was some good news on the subject, after biotech firm Novavax (NASDAQ:NVAX) said late Thursday that its coronavirus vaccine was more than 89% effective in protecting against the virus in its phase three clinical trial conducted in the United Kingdom.

In corporate news, Swedish telecommunications company Ericsson (BS:ERICAs) reported strong fourth-quarter core earnings on the back of healthy sales of 5G equipment.

Staying in the sector, Orange (PA:ORAN) ended talks late Thursday with Iliad (PA:ILD) on reaching a mobile-sharing network in France.

The main economic data releases in Europe Friday will be the German unemployment figures for January and the country’s fourth-quarter GDP number.

Earlier, French GDP shrank much less than expected at the end of last year, falling 1.3% in the final three months of 2020, compared with a forecast for a contraction of 4%.

Oil prices largely stabilised Friday, as traders balanced concerns over weakening demand due to Covid-related travel restrictions with upcoming supply cuts from Saudi Arabia as well as falls in U.S. crude stockpiles.

Saudi Arabia, the largest exporter of oil in the world, is set to cut output by 1 million barrels per day in February and March in an attempt to balance a market hit by travel restrictions as the globe battles a rise in coronavirus cases, a battle made harder by the discovery of new contagious strains.

Additionally, U.S. oil inventories dropped last week by the most since July, to their lowest level since March.

U.S. crude futures traded 0.1% lower at $52.28 a barrel, while the international benchmark Brent contract rose 0.1% to $55.16.

Elsewhere, gold futures rose 0.5% to $1,851.20/oz, while EUR/USD traded 0.1% lower at 1.2107.