Americans plan to put 37% of their cheques into betting on equities, according to a Deutsche Bank survey of online brokerage users
The FTSE 100 rose today amid growing excitement among investors that Americans would spend a large part of President Joe Biden’s pandemic stimulus cheques on the stock market.
President Biden is set to issue $1400 per person to Americans in direct payments as part of the latest stimulus plan, and according to a Deutsche Bank survey of online brokerage users, they plan to put 37% of their cheques into betting on equities.
US retail investors have already been spurring massive gains in some parts of the stock market, often leveraging up their investments by borrowing money in the hope of reaping bigger profits.
Analysts at Bank of America have also predicted a rise in stock market investing from the next round of cheques, which could boost the US markets and spillover into European stocks.
The FTSE 100 climbed 32 points to 6793.49 with Flutter surging to the top of the leaderboard with a 6% rise after it confirmed it could launch an IPO of its Fan Duel business in New York to bolster its profile there.
BT also jumped 3% on hopes that it will get a decent deal with Ofcom allowing it to make a “reasonable return” on its multibillion pound investment in fibre rollout across the UK.
Commodities stocks capped the FTSE’s gains, with steel producer Evraz, BP and Shell all dropping 1-2%.
Other macro factors potentially affecting the FTSE in the coming days include talk of a potential risk of sterling dropping because so much of it has been bought by foreign investors in recent months. The Times reported that non-resident sterling bank deposits increased to nearly £100 billion – close to the record £117 billion in August 2008, just before the currency tumbled 25%.
The fear is that the pound’s rally since July 2019 from $1.25 to $1.40 could suddenly reverse if foreign investors get jittery, as they are prone to do.
On the plus side for the UK economy, data today showed domestic orders from UK manufacturers had increased healthily in Q1 of the year, helping offset Covid and Brexit disruption. Make UK and BDO put the improved order flow down to the vaccine programme boosting confidence and outpacing a sharp fall in export orders.
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