FTSE 100 up on China data and US stimulus, and Flutter considers US IPO for FanDuel business

“It is like the markets have remembered to be happy about economic recovery again. For a time the focus was so fixed on accompanying inflation risks, the upside from a rebound in the economy as countries reopen was lost,” says AJ Bell Investment Director Russ Mould.

“Impressive growth figures from China and the passage of Joe Biden’s $1.9 trillion stimulus package in the US helped briefly launch the FTSE 100 over the 6,800 mark for the first time since January on Monday morning.

“The scale of China’s recovery from the pandemic, which beat analysts’ expectations, offers an imperfect trailer for what might happen when there is a full reopening in the West.

“Those concerns over rising prices haven’t disappeared entirely though, with bond yields still elevated and sentiment remains fragile.

“A notable trend in recent months is that the gold price seems to have lost its credentials as a hedge against inflation, even if the price has stabilised above $1,700 per ounce. Oil prices remain robust with Brent crude still close to the $70 per barrel mark.”

Flutter Entertainment

“Flutter potentially listing its sportsbook and daily fantasy sports betting business FanDuel in the US makes perfect sense for two reasons.

“First, it is likely to get a much higher valuation than is currently attributed to the operation as part of the Flutter group.

“Second, this is arguably the most exciting part of its group and it seems logical to want to capitalise on positive momentum and give investors an opportunity to invest purely in this bit. It also helps there is already a listed peer in the form of DraftKings.

“Flutter would have to sell part of its holding in FanDuel to facilitate an IPO. On one hand this means giving up some of the potential future gains, but it could also generate a significant chunk of cash to help pay down debt.

“Importantly, Flutter has indicated it would only sell a small part of FanDuel to support an IPO. That would suggest that FanDuel would still play an important role within the larger group and be able to access funding.

“Daily fantasy sports involve the creation of teams made up of real players from a professional sport. Users play against each other for a single game or the entire season and earn points from how well their players perform.

“Each player has a different salary based on how they are likely to perform and each user is given a fixed budget to select their teams.

“FanDuel makes money by collecting a percentage of user entrance fees with the rest going to the pool which is paid out to the winners at the end of each game or season.”

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