This report is not a personal recommendation and does not take into account your personal circumstances or appetite for risk.
It’s been a choppy week in equity markets amid a return of talk about Brexit consequences. The UK 100 has traded in a great 100pt range that’s yielded some fantastic trading opportunities for our clients, who’ve been supported all the way by a crack team of traders and analysts!
There’s one important issue that’s gaining traction again though: Brexit. The Bank of England yesterday gave markets its 2 Dollars by saying that if the UK leaves the EU, there will be another recession. Let’s get one thing straight – it’s impossible to predict exactly what will happen, yet it’s almost a given that the UK will now err on the side of caution and vote ‘stay.’
Just look at the ‘stay’ campaign’s tactics thus far. If the UK votes to leave, they say:
The list of petty threats goes on. But whether or not they’re founded in fact doesn’t matter. What does matter is that no one wants to be £4,000 poorer, wants their house to go down in value or wants to pay more for their holidays. It looks like a ‘stay’ vote is in the bag. You can read more about why we think a stay vote will prevail here.
What does this mean stocks-wise? Well, there’s one risk sector that’s so far failed to rally in 2016: Banks. We’re seeing shares in Barclays and RBS languishing around 2012 levels, those in Lloyds still in a downtrend from Jul 2015 highs of 89p, HSBC back around levels last seen post financial crash and Standard Chartered starting to come back from all-time lows!
Since most of the brexit consequences have taken the form of financial fearmongering by both the ‘stay’ and ‘leave’ camps (because that’s the only thing that will appeal to the entire spectrum of voters), it might make sense to conclude that the sector most likely to rebound will be the financials. The banks comprise the only sector that has not bounced significantly amid the recent stock market recovery.
The Miners and the Defensives have all rallied hard this year. Could the banking sector be next? What other stocks stand to benefit from the upcoming ‘stay’ vote? We’ve got a host of Special Reports on the topic, so visit our website to read them now. Simply sign up for our research trial and then head to ‘Market Action.’ We’re sure you’ll find them insightful!
All the best,
James Abbott, Senior Trader
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.
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