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As we draw to the end of yet another record-breaking year, it’s time to look ahead to what comes next. 2017 took on the torch from where its predecessor left off, providing shocks, scandals and recoveries aplenty.
So, what does 2018 hold? Surely nothing could top the past 24 months of excitement? Think again.
We thought we might have earned a break from going to the polls after a slew of elections and referenda in the past 18 months. However, it looks as though 2018 will see vote counters roused from their day jobs once more. Possibly even multiple times.
In Germany, Chancellor Angela Merkel is yet to form a government after her CDU/CSU party won the most votes in the country’s September Federal Election. Negotiations to form a ‘Jamaica’ coalition broke down, while the opposition SPD party are tentative in brokering a new ‘grand’ coalition – the form of government that has ruled the country since 2013.
Italy is still scheduled to hold elections in early 2018 after Prime Minister Matteo Renzi failed to win a key referendum, while closer to home, the Irish government narrowly avoided elections after the Deputy PM resigned to avoid a no confidence vote.
However, there are still wide-ranging ramifications of the political turmoil unfolding on the Emerald Isle.
Over eight months since Article 50 was triggered and UK-EU divorce proceedings began, investors are still none the wiser as to exactly what Brexit will ultimately look like once the 2019 deadline arrives.
While many in the UK are ready to talk preferential trade deals, European counterparts seem to be singing from a different hymn sheet entirely.
Most contentiously, the Northern Irish border remains a crucial issue and, while a divorce bill of €45-55bn has been suggested by both sides, this will be subject to negotiation right up until a final deal.
All this before even reaching the hurdles facing the UK and EU in 2018. Assuming the aforementioned issues are solved, next year will see the start of all-important trade talks. Will things run smoothly or might the UK walk away if the EU offers a ‘bad’ deal?
If you thought Brexit is taking a while to take shape, then spare a thought for US President Donald Trump.
It has taken almost 11 months for the President, to score a major legislative victory, seeing his Tax Reform pass in the Senate after attempts to repeal Obamacare were shot down earlier this year.
Trump’s most influential move of 2017, however, may be his nomination of Federal Reserve Governor Jerome Powell to become the next chair of the Fed.
Breaking many years of precedent, the President did not re-nominate the current head, Janet Yellen, for a second term, instead opting to promote current Fed Governor Powell. Will the former investment banker prove more hawkish than his dovish predecessor?
The year might change, but our high standard service won’t. Accendo Markets’ research team puts together daily publications covering a range of assets. To discover our award-winning offering, sign up to have it delivered directly to your inbox.
New leadership in Washington saw the record Wall Street closes of 2016 continue into the beginning of 2017, a trend that has continued right through until the final weeks. In the first 11 months of the year, the Dow Jones Industrials Index has notched over 60 record closing highs, the most record closes for the 30-stock index since 1995, while the S&P 500 saw 55 records and the Tech-focused Nasdaq an astonishing 70 record closes.
But it’s not just the US markets that have been propelled higher. Their European counterparts too have joined the act. The UK’s UK 100 overcame a plethora of political events, including a shock snap election resulting in an even more shocking hung parliament, to trade 20 fresh record highs over the course of the year, while the index only fell below 7100 points twice over the entire year. Meanwhile, the German DAX saw 25 record highs in the first 11 months of the year, smashing through both the 12,000 and 13,000 marks for the first time ever.
And while the year may be remembered for the macroeconomic and political stories that emerged, it will also go down in the history books as the year of Bitcoin. The most-recognisable cryptocurrency in circulation has rallied an astronomical 1500% over the course of the year, a rally that even overshadows the 2000 dotcom boom.
Only time will tell if the controversial asset will continue climbing higher, or whether it will prove to be the biggest bubble in financial history, eclipsing the Tulip bubble in 1600s Europe. Which outcome are you backing?
An astonishing 42 of the UK 100 ’s constituents have posted an all-time record high through the first 11 months of 2017, with 11 of those companies notching more than 30 fresh all-time high closes since the end of 2016.
That list includes newer names to some investors, with companies such as Scottish Mortgage Investment Trust (an impressive 60 new record highs), NMC Health (47) and Smurfit Kappa (13), however a plethora of UK Index stalwarts such as Persimmon (35), RELX (35), Unilever (30) and St James’s Place (27) also make the list.
However, there are also several surprises on that list. WPP, having touched its highest ever level in February, has since dived into the bottom five UK Index performers of the year, retreating 32% from its high. It is joined in the bottom 10 UK Index performers by Merlin Entertainments, which saw 10 all-time record closes, and Convatec, the UK 100 newcomer which enjoyed an impressive 31 record closes, the last of which coming on 5 June.
At the other end of proceedings, only two companies recorded an all-time record low in the first 11 months of 2017. Mediclinic International wins the award for the most recent record low, having traded an all-time low in November, and is joined by the aforementioned Convatec, which, having last traded a record high in June, fell back to trade at its lowest level since its 2016 IPO in November. Will it return to those Summer highs in 2018?
After carefully analysing the UK 100 , we’ve picked out our top 10 stock picks for 2018. Amongst other things there’s high street banks, a big four supermarket and a coffee chain owner. Which of these do you think is in for a big 2018?
Bullish: Vertical Research, Buy, Target 770p, +37% (30 Nov)
Average Target: 649p, +15% (1 Dec)
Bearish: Day by Day, Sell, Target 442p, -21% (15 Nov)
Pricing data sourced from Bloomberg on 1 December. Please contact us for a full, up to date rundown.
Bullish: AlphaValue, Buy, Target 264p, +39% (30 Nov)
Average Target: 209p, +10% (1 Dec)
Bearish: Day by Day, Sell, Target 142.2p, -25% (15 Nov)
Pricing data sourced from Bloomberg on 1 December. Please contact us for a full, up to date rundown.
Bullish: Barclays, Overweight, Target 420p, +61% (30 Nov)
Average Target: 336.5p, +29% (1 Dec)
Bearish: Exane BNP Paribas, Underperform, Target 240p, -8.1% (20 Nov)
Pricing data sourced from Bloomberg on 1 December. Please contact us for a full, up to date rundown.
Bullish: Liberum, Buy, Target 330p, +106% (27 Nov)
Average Target: 203p, +27% (1 Dec)
Bearish: Macquarie, Underperform, Target 110p, -31% (20 Nov)
Pricing data sourced from Bloomberg on 1 December. Please contact us for a full, up to date rundown.
Bullish: Jefferies, Buy, Target 91p, +37% (29 Nov)
Average Target: 71.65p, +8.2% (1 Dec)
Bearish: Goldman Sachs, Sell, Target 55p, -17% (8 Nov)
Pricing data sourced from Bloomberg on 1 December. Please contact us for a full, up to date rundown.
Bullish: Exane BNP Paribas, Outperform, Target 270p, +25% (13 Nov)
Average Target: 231p, +6.8% (1 Dec)
Bearish: Societe Generale, Sell, Target 170p, -21% (6 Nov)
Pricing data sourced from Bloomberg on 1 December. Please contact us for a full, up to date rundown.
Bullish: Goldman Sachs, Buy, Target 1208p, +42% (2 Oct)
Average Target: 865p, +1.6% (1 Dec)
Bearish: Investec, Sell, Target 630p, -26% (7 Sept)
Pricing data sourced from Bloomberg on 1 December. Please contact us for a full, up to date rundown.
Bullish: Societe Generale, Buy, Target 8000p, +118% (29 Nov)
Average Target: 5201p, +42% (1 Dec)
Bearish: HSBC, Hold, Target 3800p, +3.7% (21 Nov)
Pricing data sourced from Bloomberg on 1 December. Please contact us for a full, up to date rundown.
Bullish: Jefferies, Buy, Target 252p, +29% (29 Nov)
Average Target: 207p, +6.3% (1 Dec)
Bearish: Cenkos Securities, Hold, Target 160p, -18% (1 Nov)
Pricing data sourced from Bloomberg on 1 December. Please contact us for a full, up to date rundown.
Bullish: Berenberg, Buy, Target 5000p, +40% (24 Oct)
Average Target: 4100p, +15% (1 Dec)
Bearish: Kepler Chevreux, Reduce, Target 3500p, -2.2% (24 Oct)
Pricing data sourced from Bloomberg on 1 December. Please contact us for a full, up to date rundown.
Whether you see UK Stocks going up or down for the remainder of the year, tradable opportunities will present themselves regularly. We’re here to help you weed them out and capitalise on them. Accendo Markets can help you increase your profit potential with the use of leveraged instruments such as CFDs, a flexible alternative to traditional shares that is currently exempt from UK stamp duty.
The example above shows how buying 1,450 shares in British Land @ £6.90 requires an outlay of around £10,000 plus commission (see left-hand box), while the same exposure via a CFD requires about £500 plus commission (see right-hand box). If a trader invests in British Land, one would assume they believe the share price is likely to move in their favour. After considering the ‘worst case scenario’ and assigning funds to cover it, the trader may conclude there’s little point in exposing the full £10,000 to the BLND shares - some of that capital could be put to good use elsewhere in the markets. (Source: IG, Prices indicative)
If you had, say, £10,000 to invest in the stock market, you could deposit that amount into a share dealing account and purchase shares in a company. You would pay commission to open the position, 0.5% in stamp duty and the full £10,000 will be tied up in your chosen shares with any profit or loss based on that exposure. The same £10,000 worth of exposure can be secured with a CFD for a fraction of the initial outlay thanks to leverage, with the risk and reward the same as if £10,000 worth of traditional shares were held. But should you not be interested in leverage, you can always treat CFDs like shares. Simply deposit £10,000 into a CFD trading account and take the equivalent CFD position which will tie up just £500 (note that overnight financing costs will still apply). The remaining £9,500 is not tied up, so you can use some of that to take advantage of another short-term opportunity elsewhere, or simply leave it on the account to support any losses. Best of all, using a CFD means you pay no stamp duty!
Think shares will rise? Take a long position by buying CFDs (buy low, aiming to sell high). Think they’ll fall? Take a short position by selling CFDs (sell high, aiming to buy low). For a more detailed rundown of CFDs, their mechanics, associated costs and some trading scenarios download our ‘Comprehensive Guide to CFDs’ here.
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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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