“As we drift into 2018, the UK 100 is trading around all-time highs for the first time since June, in the aftermath of the snap UK general election. It has taken some significant reform across the Atlantic and a booster from commodity markets to take the UK’s blue-chip index back to its highest ever level, but what does the new year have in store that could see a significant deviation from current record levels?

Top of most investors’ lists will be Brexit. The contentious and complicated negotiations between the UK and the EU have already seen major disagreement on key issues, before ultimately reaching a compromise.

However, with only three issues having been covered in the first two months of negotiations – and with 100s of further issues to be resolved before the EU’s self-imposed November deadline for a final agreement – 2018’s negotiations will be fast, frivolous and potentially fraught for one, if not both sides of the table.

But there is another major obstacle that stands in the way of post-Brexit harmonisation for the EU.

An Italian general election takes place in March, with Italians electing a new Prime Minister following former PM Renzi’s failed 2016 referendum for constitutional reform. With major populist parties swinging the balance for the ‘No’ vote a year ago, these entities have further grown in support since.

In particular, the 5 Star Movement, a vehemently anti-EU party, has swelled in support, and should the party win the election in March a path to Italy’s own exit from the EU could be drawn out. As a country that uses the Euro, this could have momentous consequences for the Eurozone project. Seen as a constant weak link, the withdrawal of Italy from the bloc – and presumably the single currency – could have a profound effect on the European economy.

Whether this would be positive for other Euro using countries such as France and Germany, or whether it would have negative connotations for the entire region, could be revealed next year.

Also in 2018, financial markets will be looking to cues from central banks – most importantly from the US Federal Reserve under new management and the European Central Bank, whose current asset purchasing taper agreement reaches an end in September. Any hints as to the length and pace of the extensions will be closely priced into the Euro, and will therefore influence the multitude of European-focused heavyweight defensives on the UK 100 .

Lastly, it wouldn’t be a preview without mentioning controversial US President Donald Trump. The Republican leader finally scored his first major legislative victory in 2017 by ushering in the first major overhaul of the US tax system in over 30 years. However, after such a success, where does Trump look next?

The President promised a vast $1 trillion infrastructure spending plan alongside tax reform and the repeal of Obamacare, leaving many analysts to expect that this will be his next course of action. However, financial markets will also be considering the likelihood of a range of de-regulations for banks and traders, including the ban on proprietary trading known as the Volcker rule. This could have a major impact on Banks’ earnings after a dismal 2017.

All this will be looked at before House and Senate elections in November, where Trump is hoping to underscore the first half of his term with further seats for Republicans. But will the people adhere?

Concerned you may not be able to keep up with these key 2018 trends? At Accendo, we keep our clients informed, cutting through the noise to help you see the picture more clearly. Enjoy the same access our clients do by signing up to receive our award-winning research offering. How’s that for a New Year’s resolution?

Wishing you a successful 2018,

Henry Croft, Research Analyst, 29 December 2017