European Shares Fall On Risk Aversion

European stocks fell on Friday, with investor sentiment jolted by a surge in speculative trading from retail investors organized over online forums, such as Reddit.

Hedge funds and other large investors that bet against GameStop have lost more than $5bn after a cohort of amateur investors joined forces to inflate the price of shares in the U.S. video game chain, according to data analytics company S3.

Lingering concerns over tight liquidity in China, weak U.S. data released overnight, rising Covid-19 cases and the slow and chaotic nature of the bloc’s vaccination rollout also rattled investors.

The pan European Stoxx 600 dropped 0.8 percent to 400.13 after closing 0.1 percent higher on Thursday. The German DAX was down 0.7 percent, France’s CAC 40 index shed 0.8 percent and the U.K.’s FTSE 100 was down 0.9 percent.

Swedish fashion retailer H&M slumped 4.5 percent after it reported a drop in full-year sales and profit.

Telecommunications equipment company Ericsson surged 7.5 percent after posting forecast-beating fourth-quarter net profit.

BBVA lost 2.6 percent. The Spanish bank said it intends to buy back 10 percent of its shares and return to paying 35-40 percent of its profits in dividends.

Givaudan, a Swiss manufacturer of fragrance and flavor products, declined 2.3 percent after confirming its mid-term targets.

SAP shares were down 0.8 percent. The German software company said it expects fiscal 2021 adjusted operating profit of 7.8 billion euros to 8.2 billion euros, compared to last year’s 8.28 billion euros. The outlook represents a 1 percent to 6 percent drop at constant currencies.

British mining company Polymetal declined 1.3 percent after it warned of higher costs in 2021.

In economic releases, German GDP grew 0.1 percent sequentially in the fourth quarter, slower than the 8.5 percent expansion posted in the third quarter due to the restrictions imposed to contain he spread of Covid-19, data from Destatis showed. Economists had forecast nil growth.

On a yearly basis, GDP adjusted for calendar effects, declined 3.9 percent after falling 4 percent in the third quarter.

Separately, the labor office said the number of people out of work in Europe’s largest economy fell by 41,000 in seasonally adjusted terms to 2.729 million.

The seasonally-adjusted unemployment rate remained unchanged at 6 percent compared with the previous month.

French GDP fell 1.3 percent sequentially in the fourth quarter, in contrast to an 18.5 percent rise in the third quarter, Insee said. Economists had forecast a quarterly decline of 4 percent.

Another report from the statistical office revealed that household spending in France surged 23 percent in December from November, when consumption was down 18 percent due to the second lockdown.