If the first quarter of 2017 only proves to be a warm up, then we are in for one sensational follow up act in Q2! Already, we have seen global indices hitting all-time highs, a new President inaugurated in the US, the largest tech IPO since 2011 in the form of Snap Inc.’s $19.7bn listing, several major UK M&A deals being struck political elections in the Netherlands dashing the hopes of European populism, central bank meetings aplenty, and, of course, a little event called Brexit finally getting underway 9 months after the UK’s fateful referendum.
Yet there is still a plethora of events on the horizon, listed in detail below, that could have a profound impact on the UK’s largest companies, providing investors with ample opportunities to profit from this compelling quarter.
European Elections: Part Deux
In the quarter’s main event, the fight between anti-EU populism and pro-EU liberalism takes a new battleground in France as voters go to the polls for the first time on 23 April, while the eventual winner will be decided in a second round vote on 7 May. The right wing and anti-EU National Front leader Marine Le Pen is expected to win the first round, however polls suggest a second round defeat by either Francois Fillon or Emmanuel Macron. The former, however, remains embroiled in a fraud scandal that could threaten his campaign, while the latter is seen as inexperienced. Could Le Pen follow Brexit and Trump to spring a third populist surprise in 12 months?
Central Banks: Hawks versus Doves
Despite delivering only the third rate hike since 2008, markets were left disappointed as the US Federal Reserve failed to increase its median forecasts for rate hikes in 2017 from 3 to 4, leading to a broad US dollar sell off. Yet across the Atlantic, central bank policy makers from the ECB and the Bank of England both showed a surprisingly hawkish turn. Could the dissenting vote to raise interest rates by the BoE’s Kristin Forbes coupled with increasingly hawkish rhetoric from continental peers signal Europe is ready to roll back accommodative policy?
US Reform: Trump’s Congress contest
Having been inaugurated as US President in January, Donald Trump has not had the best of luck with the US authorities so far. His travel ban was overturned by the judiciary, while his maiden legislative reform on healthcare was withdrawn at the 11th hour. However, in failing at his first attempt at implementing his campaign pledges, Trump is now free to follow through with more pro-business, pro-growth reforms that could help stimulate the US economy to new heights; tax reform, infrastructure spending and deregulation across the banking and energy sectors could have a profound impact on markets should Trump succeed at the second time of asking.
Over the page we analyse the best and worst UK 100 performers of the year so far. Perhaps some of the names overleaf might strike you as being out of place… Could their fortunes change in Q2? Take a look!
