WALL STREET SET FOR WEAK OPENING AS HEDGE FUNDS BATTLE SMALL INVESTORS

US stock futures and European stocks fell on Friday while the safe-haven dollar held its ground as a Wall Street battle between hedge funds and retail investors and a row in Europe over COVID-19 vaccine supply cooled risk appetite, Carolyn Cohn reported for Reuters.

Wall Street has been gripped by an assault by small traders organizing over online forums, such as Reddit, to force hedge funds to reverse short positions - or bets that stocks would fall - on companies such as GameStop and AMC Entertainment.

The stand-off comes after central bank and government stimulus have propelled stock markets to record highs in recent weeks, encouraging involvement by retail investors.

“There’s fear in terms of the volatility,” said Derek Halpenny, head of research for global markets at MUFG. “Specific trades in pockets of the market can spread into the broader market.”

Shares in GameStop, AMC Entertainment and BlackBerry plunged more than 40% on Thursday after several online platforms imposed buying halts, but rebounded as Robinhood and Interactive Brokers eased the restrictions on Friday.

GameStop shares nearly doubled and AMC Entertainment was up 55% in US pre-market trade.

“Any hedge fund will be carefully looking at all their shorts after this week and regulators will look very carefully at collective retail trading,” Deutsche Bank analysts said.

S&P 500 futures recouped some ground in European trade but were down 0.5% by 1138 GMT. Nasdaq 100 futures fell 0.7%.

Britain’s FTSE 100 index fell 0.8% and European stocks dropped 0.7%. The U.S. dollar rose to its highest since mid-November against the yen, and was steady against an index of currencies, bringing its weekly rise to 0.4%.

The euro edged up 0.1% and the pound was steady. Bitcoin jumped as much as 14% to a two-week high after Tesla Inc TSLA.O chief Elon Musk tagged the cryptocurrency in his Twitter biography.

WEEKLY FEATURE : JOSE MARI CHAN AND THE CHRISTMAS ANTHEM