This report is not a personal recommendation and does not take into account your personal circumstances or appetite for risk.
As we highlighted in our opening paragraph, 2017 has already seen a whole host of not just ‘once every four years’ events, but once in a generation events. During some years, this would have been more than enough for traders. However, 2017 is providing investors with a sensational number of market-sensitive events which have already made a significant impact on the UK’s blue chip index, the UK 100 , as shown below.
Source: AlphaTerminal (29 March)
Some of the names in each of the tables above may look out of place. Most notably, housebuilder Barratt Developments, one of the top 10 underperformers during 2016, has so far been 2017’s joint 7th best performer (+18.1%), alongside its sector peers Persimmon (also 7th; +18.1%) and Taylor Wimpey (2nd; +25.7%). This comes after the sector had a torrid 2016, in which the unfavourable result of Britain’s EU referendum and subsequent Sterling weakness deterred investors. Fast forward through the first quarter of 2017, however, and the sector is the one of the best performing in the last 3 months. Can the Housebuilders’ recovery continue?
The same can be said of International Consolidated Airlines (4th; +21.3%). The parent group of British Airways was the 4th worst performer of 2016 (-27.8%) as the weak pound and weaker traffic grounded the sector, however the airline has made a tremendous resurgence, rising to become one of the best performing stocks of 2017.
At the other end of the performance table, BP (97th; -11%) is currently in a very different position to how it ended 2016. Having been the 11th best performer of the previous 12 months, a retracement in Crude Oil prices have left it and sector peer Shell (89th; -5.8%) find themselves in an unfortunate predicament. The same can also be said for Tesco (93rd; -7.6%) having been one of the top 20 performers in 2016. Clean up in aisle four!
Note that there is some divergence between sector peers. While both Burberry (10th; +15.9%) and Next (99th; -13.9%) are both clothing retailers, the fortune of the former is very different to the latter. This, like many other notable UK Index performance, can be attributed to the strength of Sterling in comparison with its global peers, as Burberry relies upon global exports while Next imports its wares from locations around the world. However, with the 2-year Brexit process now underway, could we see continued divergence or might a U-turn be imminent?
With the aforementioned heavyweight macroeconomic and political events just around the corner, we’ve compiled 10 of our favourite stocks that we think you should watch during 2017’s second quarter. Which do you like?
This research is produced by Accendo Markets Limited. Research produced and disseminated by Accendo Markets is classified as non-independent research, and is therefore a marketing communication. This investment research has not been prepared in accordance with legal requirements designed to promote its independence and it is not subject to the prohibition on dealing ahead of the dissemination of investment research. This research does not constitute a personal recommendation or offer to enter into a transaction or an investment, and is produced and distributed for information purposes only.
Accendo Markets considers opinions and information contained within the research to be valid when published, and gives no warranty as to the investments referred to in this material. The income from the investments referred to may go down as well as up, and investors may realise losses on investments. The past performance of a particular investment is not necessarily a guide to its future performance. Prepared by Michael van Dulken, Head of Research
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