Senator Elizabeth Warren has written to Vladimir Tenev, the CEO of Robinhood, asking why his service restricted trading in shares such as GameStop last week.

Senator Warren says:

In addition to putting customers’ finances at risk, Robinhood’s actions revealed a new set of questions about its relationship with large hedge funds and other financial institutions, and follows past criticisms of Robinhood’s insufficient investor protections.

Robinhood has a responsibility to treat its investors honestly and fairly, and provide them with access to the market under a transparent and consistent set of rules. It is deeply troubling that the company may not be doing so.

Last week, Robinhood blamed the increased deposit requirements from its clearinghouse for the curbs.

Senator Warren, though, is concerned about the firm’s links with Citadel Securities, the electronic-trading firm owned by hedge-fund billionaire Ken Griffin, which executes Robinhood’s trades.

That link has put Citadel in the spotlight, as the firm bailed out Melvyn Capital Management after its short-selling bets against GameStop went sour.

Senator Warren asks:

Did Robinhood engage in any discussions with any Citadel businesses or affiliates prior to Robinhood reaching its decision to institute restrictions on trading for GameStop and other stocks?

The letter is online here.

Trading app Robinhood has relaxed its restrictions on buying GameStop shares.

It will now let customers buy up to 100, up from 20 (including shares already owned).

Back on Friday, customers were limited to just one share, having been temporarily restricted from buying any last Thursday.

That ban sparked anger from customers, and claims that Robinhood was trying to protect the hedge funds who had shorted GameStop - and were facing huge losses.

Robinhood, though, blamed demands for higher deposits from its clearinghouses due to stock volatility.

It has also lifted restrictions on other stocks popular with the Reddit trading community, including cinema chain AMC.

CNBC has more details:

Clients can now buy 1,250 shares of AMC Entertainment, up from the 350 earlier in the trading day.

Robinhood clients can now buy 3,000 shares of Express, up from the 1,000 share limit. Investors can buy up to 12,000 shares of Naked Brand Group up from the previous restrictions of 6,500. Nokia’s buying cap is the same at 2,000 shares.

Shares in GameStop have tumbled in early trading, and are currently down around 49% at $114.

Trading in the videogame retailer were briefly halted at the open, due to high volatility, as it continues to fall away from last week’s highs.

Other heavily shorted stocks which surged last week, such as cinema chain AMC and headphone manufacturer Koss Corporation, are also falling in early trading.

Shares in GameStop are slumping in pre-market trading, falling sharply below the highs seen during last week’s ‘short squeeze’ surge.

GameStop is currently down around 40% in US pre-market trading, at around $133.

They had already fallen 30% during Monday’s trading session to $225, having traded over $400 at one stage last Thursday.

Cinema chain AMC Entertainment Holdings, another company popular with the WallStreetBets group on Reddit, is also down 30% in pre-market trading.

The tumble in GameStop’s shares suggests that some of the hedge funds who had been caught in last week’s ‘short squeeze’ have now closed their short positions.

On Monday, analytics firm S3 Partners reported that the number of GameStop shares that were shorted had fallen by over half in a week, as short sellers covered their bets.

That would mean that fewer hedge funds who had shorted the stock would now be trying to buy back GameStop shares to cover their losses.

CNBC explains:

GameStop’s shares have traded wildly in recent weeks after retail traders on Reddit sparked a short squeeze in the stock, a phenomenon where traders who had bet against the stock are forced to buy it to limit their losses, pushing the price even higher.

Short interest in GameStop as a percentage of shares available for trading dropped to about 53% from over 110% a week ago, according to data from S3 Partners.

“Both fundamental and momentum short sellers have found opportunities and price exit points to trim their positions in the face of these losses as the GME short squeeze is in full force,” said Ihor Dusaniwsky, S3 managing director of predictive analytics.

And here’s Reuters take: Number of GameStop shares shorted falls by over half in week -S3 Partners

Yesterday, stock trading app Robinhood lifted its restrictions on buying GameStop shares, letting users buy up to 20.

Robinhood made the move after raising another $2.4bn from investors. That will help it meet demands for higher margin deposits by the clearing houses who handle its trades in shares and options, following last week’s stock volatility.

The euro has fallen to a nine-month low against the pound today, as fears of a eurozone double-dip recession rise.

Sterling rose to €1.1365 this morning, for the first time since last May, as this morning’s GDP report showed the eurozone shrank by 0.7% in the last quarter of 2020, and will probably keep shrinking in the current quarter.

It means one euro is worth 88p.

The euro has also dropped to a seven-week low against the US dollar today.

Raffi Boyadjian, senior investment analyst at XM, says:

Persisting doubts about the EU’s ability to clean up its vaccine mess and the prospect of prolonged lockdowns continues to put a dampener on the currency.

Jeffrey Halley, senior market analyst at OANDA, agrees that fears of a double-dip recession are weighing on the euro:

The Euro continues to bear the brunt of Dollar strength, with fears of a double-dip recession caused by its poor vaccine rollouts and ham-fisted policy response to that problem.

With criticism of the EU’s vaccine strategy rising, commission president Ursula von der Leyen has claimed today the vaccination programme in the UK has enjoyed a head start through compromising on “safety and efficacy” safeguards.

My colleague Daniel Boffey explains:

The former German defence minister, who took command of the EU’s executive branch in 2019, said she had a responsibility to take time to ensure the success of the bloc’s mass vaccination programme.

In the face of heavy criticism, including from her predecessor, Jean-Claude Juncker, Von der Leyen said she was committed to her role and should be judged at the end of her term in 2024.

“Some countries started to vaccinate a little before Europe, it is true,” she said, asked about the UK. “But they resorted to emergency, 24-hour marketing authorisation procedures.

Just 2.84% of the EU’s adult population having received a jab against 14.41% in the UK as of Tuesday, Daniel adds. More here:

The slow start to Europe’s Covid-19 vaccination programme could weigh on its recovery from the pandemic, says Sam Miley, economist at the Centre for Economics and Business Research.

Miley explains:

The downtick in economic output in Q4 reflects the widespread reimplementation of Covid-19 contain measures across the continent, though does mask varying degrees of restriction severity across member states.

This downward pressure on economic output looks set to continue in early 2021 due to the clampdown on new, more virulent strains of coronavirus, while subdued economic activity could continue for an even more protracted period in light of the eurozone’s relatively slower rollout of vaccinations.”

Miley adds:

Though mass vaccination should facilitate the phasing out of restriction measures, the fact that rollout is currently slower in the eurozone suggests that the economic benefits will be somewhat less pronounced than elsewhere. This is reflected in the most recent Cebr forecasts which, although pointing to an annual growth rate of 5.1% across both the eurozone and the UK in 2021, show considerable divergence from 2022 with the former set to grow by just 2.7% compared to 6.6% for the latter.

Indeed, the extent to which the eurozone could suffer from a prolonged period of subdued economic activity is further highlighted by our full year GDP forecasts, which suggest that output in the eurozone will not exceed the levels seen in 2019 until the mid-2020s.

The eurozone economy shrank in the last quarter as the second wave of the Covid-19 pandemic dragged down growth across the region.

Eurozone GDP fell by 0.7% in October-December, a time when many governments introduced new restrictions and lockdowns to try to curb the virus. GDP fell by 0.5% in the wider European Union during the quarter.

Statistics body Eurostat also reports that the eurozone economy shrank by around 6.8% during 2020 as a whole, which highlights the economic damage suffered last year.

As these charts shows, the summer rebound fizzled out once the second wave of the pandemic hit.

But the decline in Q4 was less steep than earlier in the year (and better than expected) as restrictions weren’t as tight as in the first lockdown, and firms were better prepared.

Eurostat explains:

These declines, related to COVID-19 containment measures, follow a strong rebound in the third quarter of 2020 (+12.4% in the euro area and +11.5% in the EU) and the sharpest decreases since time series started in 1995 observed in the second quarter of 2020 (-11.7% in the euro area and -11.4% in the EU).

According to a first estimation of annual growth for 2020, based on seasonally and calendar adjusted quarterly data, GDP fell by 6.8% in the euro area and 6.4% in the EU.

Today’s report also shows that Austria suffered the sharpest quarterly contraction, with GDP down 4.3% in October-December, followed by Italy (-2.0%) and France (-1.3%).

Germany, though, managed a 0.1% rise in GDP during the last quarter, with Spain up 0.4%.

After surging to an eight-year high yesterday, the silver price has fallen by almost 5% this morning.

Silver has dropped back to $27.70 per ounce, having yesterday hit $30/oz for the first time since 2013.

Monday’s rally sparked talk that silver was the latest target of retail investors - although many on WallStreetBets insisted that they were not behind the move, with some blaming hedge funds (as we covered in this blog yesterday).

Carlo Alberto De Casa, chief analyst at ActivTrades, says the size of the silver market makes it much harder to influence than a single stock.

After the initial skyrocketing of the price, silver has since lost 5% with the price dropping back below $28. In this case, the fundamental drivers are holding – at least for the time being – against the irrationality of markets.

Of course, things could change, but the resistance level of $30 touched yesterday and last summer seems to represent a significant barrier for further rallies of the precious metal.

Today’s falls also follow a margin hike by the CME Group. Last night it raised the margins on Comex silver futures by 18%, as part of “the normal review of market volatility to ensure adequate collateral coverage.”

The move means that those who want to trade silver futures need to put up more collateral, which would curb speculative trading.

Vincent Tie, sales manager at Silver Bullion, explains (via Reuters):

“(Higher margins) will temper the buying frenzy and we could see prices drop as much as to $26 in the next two weeks. It’s also triggering some profit booking,”

Online casinos will be forced to overhaul slot machine games to slow them down and remove features that cause players to lose track of how much they are spending.

In a series of curbs likely to reduce the industry’s £2.2bn a year revenue from online slot machines, the Gambling Commission has told UK companies to slow them down, with a gap of at least 2.5 seconds between spins.

They will also have to remove “auto-play” options, where players can set the slot machine to spin on its own multiple times. This can lead to gamblers not realising how much they are losing, the regulator said.

Slot machines will also be barred from playing positive-sounding noises or music when a player has actually lost money.

The feature is part of a phenomenon known as “losses disguised as wins”, which tricks players into thinking they have enjoyed a positive outcome when they have actually lost, enticing them to bet more.

Companies will also have to abolish features that give players the “illusion of control”, when in fact the spins are determined by a random outcome generator.

Firms will no longer be able to offer “reverse withdrawals”, in which a player opts to collect their winnings but then changes their mind and feeds the cash back into their account.

Operators also will have to clearly display to the player their total losses or wins and time played during any online slots session....

Here’s the full story:

European stock markets are rallying this morning, adding to Monday’s gains, and clawing back some of last week’s losses.

In the City, the FTSE 100 index is 38 points higher at 6505, up 0.6%, while the EU-wide Stoxx 600 has gained 1%.

Investors seem to have regained their confidence after last week’s wobble amid the GameStop short squeeze (as some hedge funds ‘derisked’ and closed positions).

Connor Campbell of SpreadEx says the markets are looking for president Joe Biden to push through his $1.9trn stimulus plan:

It does seems that investors have very quickly set aside the fears that tanked January’s gains during the final sessions of the month. This despite a lack of material change in 3 of the key areas – Covid-19, the progress of the US stimulus package, Reddit-led volatility – that caused such conniptions last week.

That’s a potential danger as the month progresses, though a swift and decisive move on the Covid-19 relief bill would keep any other fears at bay.

Over the weekend, ten Republican senators pitched a plan with a reported price tag of just $600bn - a lowball offer that could encourage the White House will seek to bypass them (by using the budget reconciliation tool to get a larger package approved).

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

After a strong run, the UK housing market may be running out of steam - as a tax break introduced to stimulate demand nears its end.

House prices fell in January for the first time since last June, the latest figures from mortgage lender Nationwide show.

The average price dropped by 0.3% month-on-month, which is a sharp reverse on the 0.9% monthly growth seen in December.

It pulls the annual rate of house price growth down to 6.4% in January, down from 7.3% in December.

The average property now costs £229,748, Nationwide reports, down from £230,920.

House prices have surged in recent months, amid a scramble for larger or more rural homes after the Covid-19 pandemic forced many families to work and study from home.

The rally was also sparked by the government’s stamp duty holiday, announced last summer. It allows buyers of homes of a value up to £500,000 in England and Northern Ireland to pay no stamp duty, or a reduced rate for homes above that.

In Scotland and Wales, the first £250,000 of the transaction value is exempt from stamp duty.

That holiday is currently due to end on 31 March, meaning time is running out to secure a sale and complete it.

Robert Gardner, Nationwide’s chief economist, explains:

“To a large extent, the slowdown probably reflects a tapering of demand ahead of the end of the stamp duty holiday, which prompted many people considering a house move to bring forward their purchase.

While the stamp duty holiday is not due to expire until the end of March, activity would be expected to weaken well before that, given that the purchase process typically takes several months (note that our house price index is based on data at the mortgage approval stage).

Gardner also warns that the market could slow in the coming months, especially if unemployment keeps rising:

“Looking ahead, shifts in housing preferences are likely to continue to provide some support for the market. However, if the stamp duty holiday ends as scheduled, and labour market conditions continue to weaken as most analysts expect, housing market activity is likely to slow, perhaps sharply, in the coming months.

Also coming up today, we find out how the eurozone economy fared in the last three months of 2020, as the second wave of the Covid-19 pandemic hit the region.

Investors will also be watching silver - which hit an eight-year high yesterday before dropping back - and GameStop, whose shares tumbled 30% yesterday.

The agenda

• 9am GMT: Flash estimate of Italian GDP in Q4 2020
• 10am GMT: Flash estimate of eurozone GDP in Q4 2020