FTSE 100 rises expected as traders look beyond GameStop Reddit saga to optimism on vaccines

The FTSE 100 was set to leap in early trading after Wall Street’s strong gains brought a renewed bout of optimism to financial markets after the GameStop-Reddit saga.

After the S&P 500 jumped 1.6% yesterday, Asian stock markets had strong sessions today, triggering expectations of a similar follow-through in Europe.

The FTSE 100 was being called up around 50 points by IG Index traders, with nearly 80% of those using the platform being “long” of that price - betting on bigger gains. CMC Markets was calling it up 48 points.

Wall Street made its gains as investors looked through the fight between  retail investors using Reddit and other forums and the hedge funds to focus instead on vaccine rollouts, which have been progressing well in the US.

For several sessions, the news had been dominated by the battle between Reddit users on the wallstreetbets forum and investors shorting stocks. 

Yesterday morning, it appeared that the retail investor swarm was targeting silver, driving the metal’s price up massively and helping stocks such as Fresnillo. 

Later, users of the forum denied it was them, with many even insisting the “fake news” that it was had been prompted by the hedge funds themselves. 

The silver price lost some of its lustre after yesterday hitting its highest levels since 2013.

The “hot” posts being watched most on the forum this morning were mostly made up of calls not to sell shares in GameStop, where they have been fighting the main battle with shorts. 

GameStop shares fell heavily yesterday.

As one said: “I don’t care. Posting fake silver news was the last straw. I will hold and we will all bleed together.”

“Down $10MM [$10 million] and still holding. Bought 750 more shares today,” wrote another.

The scene appeared set for another day of hectic trading with the Vix volatility index remaining high.

But the overall sentiment was optimistic. As David Madden of CMC Markets said, fears that hedge funds getting burned by the Reddit traders might have to liquidate their share portfolios to fund losses were easing this week. 

“A number of hedge funds admitted they endured large losses on account of the GameStop situation but some confidence was restored to he markets seeing as they are soldiering on.”

Reuters reported that Opec had increased oil production in January to 25.75 million barrels per day. That was lower than forecasts, triggering a rise in the oil price and reminding traders of last month signal that Saudi Arabia was cutting production.