Last week I wrote about how a strong pound sterling was proving a hindrance for the UK Index and its many internationally exposed names (reminder). We are witnessing a similar drag on the index into this long weekend, GBP having embarked on another leg higher (bullish pennant?) versus the USD to trade its best since early October.

However, the real pain is being felt by defensive names rather than those more associated with risk appetite. This suggests a bullish bias remains, even as the index tracks back to test 7200, and a chance that investors may be willing to pounce on any good news from next Tuesday, on the their return from the long weekend, helping deliver another recovery rally in spite of geopolitical risks like North Korea and France. So that’s where we stand on the index.

It’s not often you see UK Index blue-chip stocks put on over 10% in a week, but Royal Bank of Scotland (RBS; +11.5%) and healthcare provider Mediclinic (MDC; +14.7%) did just that. RBS was helped by the French first round election last weekend calming investor nerves about the Eurozone. Sentiment was further bolstered this morning after better than expected Q1 profits propelled them above 260p for the first time since February 2016. MDC shares were in high demand after Abu Dhabi waived a 20% co-pay rule for those using medical insurance for treatment, sending shares to their highest since November.

Other winners this week include fellow bailed out UK bank Lloyds Banking (LLOY; +8%) which has been rallying since Wednesday of late week. It began with expectations of good Q1 results. Then we had relief after the French election first round. Yesterday’s due delivery of good results saw them jump. And today the government said it was now only holding a 1% stake. The sum contribution has helped the shares test the magic 70p level which has been eluding them since February. It has also got them back on many an investor’s radar give the prospect of share price gains and more dividends.

At the tail end, Utility giants like Centrica (CNA; -5.4%) and SSE (SSE; -4.3%) got a drubbing from fears of the Conservative party manifesto for the upcoming snap election including a cap on UK household energy bills. Decent Q1 results from Whitbread (WTB) were overshadowed by management’s expectations of a tougher consumer environment for 2017. Precious metals miners Randgold Resources (RRS; -5.0%) and Fresnillo (FRES 3.0%) felt the effects of further falls in Gold and Silver prices as risk appetite sapped safe haven demand. FRES also went ex-dividend like ITV (ITV; -3.0%).

Like I said last week, yes I write this at the end of the week after the proverbial horse has bolted. However, don’t forget that none of this is news to any of my clients. We’ve been watching and updating them in real time about all these since Monday’s strong open and relief rally following the French election. We are in a position to know what’s moving and where the momentum is immediately. It’s our job. As a client, with an interest in any of the above stocks, you’d have been first to know, allowing you to decide whether to (buy in, buy more, hold firm, sell some, sell all or even sell short).

In a similar vain to last week, our research publications of the week again included two of the above names as trade ideas and/or observations, offering you the chance to profit from moves of 5-10% in less than a week. Imagine having that opportunity every week. To find out which names I am talking about, get access to our research permanently  and see for yourself why our clients value it so highly and why we were recently voted 2017 Best CFD Research Service. We’re sure you’ll find value. Everyone does.

Enjoy your long weekend.

Mike van Dulken, Head of Research, 28 April 2017