A danger of “shockwaves” amid a “febrile” atmosphere on Wall Street has been flagged by an investment expert, amid what he described as a “battle” between “amateur investors” and hedge funds shorting video games seller GameStop.

Russ Mould, investment director at stockbroker AJ Bell, said: “The FTSE-100 might be stuck in a funk but there are still plenty of signs of exuberance on the other side of the Atlantic.

“Video games seller GameStop or ‘GameStonk’, to use the vernacular from Tesla founder Elon Musk’s tweet, continues to surge with Musk’s remark on Twitter prompting further gains and taking the company’s valuation into the tens of billions of dollars.”

Mr Mould added: “Amateur investors on social media platform Reddit are engaged in a battle with hedge funds which are shorting GameStop – and several other stocks including Blackberry and Virgin Galactic – raising fears about a bubble in the markets given these stocks are being backed on little tangible news.

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“A hot US firm which is delivering some substance behind the hype is Microsoft, with a strong showing for its Azure cloud services division helping it to beat quarterly expectations.

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“All eyes will be on Tesla and Facebook who are due to report after the market close in the US, in such a febrile atmosphere even the slightest disappointment could create shockwaves in the market.”