Markets

European markets close lower as nerves persist over retail trading mania, vaccines

Key Points
  • Sentiment has been jolted by a surge in speculative trading from retail investors.
  • Several e-brokers took steps to curb the deliberate buying of heavily-shorted names on Thursday.
  • Johnson & Johnson on Friday said its one shot vaccine was 72% effective in the U.S.

LONDON — European markets closed lower Friday as market jitters persisted over a retail trading frenzy that has rocked Wall Street.

The pan-European Stoxx 600 ended the session down by 1.9%, with retail stocks shedding 2.6% to lead losses as all sectors slid into negative territory.

Sentiment has been jolted by a surge in speculative trading from retail investors, and several e-brokers took steps to curb the deliberate buying of heavily-shorted names on Thursday after a week of huge and seemingly synthetic moves in unfavored names like GameStop, spurred by Reddit group WallStreetBets.

U.S. stocks fell sharply on Friday after trial results from Johnson & Johnson's coronavirus vaccine disappointed some investors and amid worries about the retail trading. Johnson & Johnson on Friday said its one shot vaccine was 72% effective in the U.S., but less potent in other regions.

Also on Friday, the European Medicines Agency approved the vaccine developed by British pharma giant AstraZeneca for emergency use in the EU, around a month after it was first given the greenlight in the U.K., which recently left the bloc.

But the European Commission also on placed temporary controls on the export of coronavirus vaccines made inside the bloc, following a spat with AstraZeneca and wider supply issues.

In corporate news, Daimler beat 2020 full-year profit expectations on Thursday on the back of a strong fourth quarter, with earnings before interest and taxes (EBIT) coming in at 6.6 billion euros ($7.99 billion) versus the 5.25 billion euros expected by analysts. The German automaker also struck an optimistic tone in its 2021 guidance.

New Commerzbank CEO Manfred Knof plans to cut a further 10,000 jobs and close hundreds of branches, Germany's second-largest lender announced Thursday.

On the data front, the French economy contracted by less than expected in the fourth quarter of 2020 amid a second national coronavirus lockdown, official statistics revealed Friday. Fourth-quarter GDP (gross domestic product) came in at -1.4% versus the -4% average consensus in a Reuters poll.

Ericsson shares jumped 7.6% to the top of the Stoxx 600 after the Swedish telecoms company comfortably surpassed fourth-quarter profit expectations.

At the bottom of the European blue chip index, German car battery maker Varta and biotech firm Evotec fell 18.8% and 12.3% respectively. Both stocks had been boosted in previous sessions by the unwinding of large short positions by the Wall Street hedge funds under attack by retail traders.

- CNBC.com contributed to this report.