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GameStop stock wreak havoc on markets

WINNIPEG, Jan. 28 (MarketsFarm) – The following is a glance at the news moving markets in Canada and globally.

– The meteoric ascent of United States-based video game retail chain GameStop on the stock market continues to raise eyebrows today as hedge funds suffer billions of dollars in losses. One share of GameStop (GME) was worth US$347.51 as of 8:15 a.m. CST today, a major increase from three weeks ago when it was priced at US$18.08. Individual traders, most of whom congregating on the social media website Reddit, noticed that many of its shares were being shorted, that is, borrowed by investors to be sold before the stock went down where they can buy back the shares for profit and return them to the lender. These traders then bought GME stock in droves, raising the price and causing hefty financial losses for short sellers. After hedge fund Melvin Capital closed out of its short position on GME, CNBC reported it received a US$3 billion infusion to recoup its finances. Yesterday, the Dow Jones and the S&P 500 lost 2.1 and 2.6 per cent, respectively, amidst speculative trading activity. Many brokers have since restricted trading on GME.

– The U.S. Department of Commerce released its fourth-quarter GDP snapshot today, revealing that the economy contracted by 3.5 per cent in 2020, the largest drop since 1946. It is the first annual decline since 2009 at the end of the Great Recession. The COVID-19 pandemic was cited as the main reason, which shuttered businesses and put people out of work.

– China warned Taiwan today that “independence means war” after Chinese fighter jets and bombers encroached Taiwanese air space last weekend. This caused Washington to tell the Chinese government, which does not recognize Taiwan’s sovereignty, to stop pressuring the island nation. “The military activities carried out by the Chinese People’s Liberation Army in the Taiwan Strait… are a solemn response to external interference and provocations by ‘Taiwan independence’ forces,” Chinese Defense Ministry spokesman Qu Wian said. Earlier today, Taiwan’s Defence Ministry reported six Chinese air force aircraft, including four J-10 fighter jets, flew into its air defence zone.

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