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 His travel ban was overturned by the judiciary, while his maiden legislative reform on healthcare was withdrawn at the 11^th hour.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!

As we highlighted in our opening paragraph, 2017 has already seen a whole host of not just ‘once every four years’ events, but once in a generation events. During some years, this would have been more than enough for traders. However, 2017 is providing investors with a sensational number of market-sensitive events which have already made a significant impact on the UK’s blue chip index, the UK 100 , as shown below.

UK 100 Outperformers

UK 100 Underperformers

Source: AlphaTerminal (29 March)

Some of the names in each of the tables above may look out of place. Most notably, housebuilder Barratt Developments, one of the top 10 underperformers during 2016, has so far been 2017’s joint 7th best performer (+18.1%), alongside its sector peers Persimmon (also 7th; +18.1%) and Taylor Wimpey (2nd; +25.7%). This comes after the sector had a torrid 2016, in which the unfavourable result of Britain’s EU referendum and subsequent Sterling weakness deterred investors. Fast forward through the first quarter of 2017, however, and the sector is the one of the best performing in the last 3 months. Can the Housebuilders’ recovery continue?

The same can be said of International Consolidated Airlines (4th; +21.3%). The parent group of British Airways was the 4th worst performer of 2016 (-27.8%) as the weak pound and weaker traffic grounded the sector, however the airline has made a tremendous resurgence, rising to become one of the best performing stocks of 2017.

At the other end of the performance table, BP (97th; -11%) is currently in a very different position to how it ended 2016. Having been the 11th best performer of the previous 12 months, a retracement in Crude Oil prices have left it and sector peer Shell (89th; -5.8%) find themselves in an unfortunate predicament. The same can also be said for Tesco (93rd; -7.6%) having been one of the top 20 performers in 2016. Clean up in aisle four!

Note that there is some divergence between sector peers. While both Burberry (10th; +15.9%) and Next (99th; -13.9%) are both clothing retailers, the fortune of the former is very different to the latter. This, like many other notable UK Index performance, can be attributed to the strength of Sterling in comparison with its global peers, as Burberry relies upon global exports while Next imports its wares from locations around the world. However, with the 2-year Brexit process now underway, could we see continued divergence or might a U-turn be imminent?

With the aforementioned heavyweight macroeconomic and political events just around the corner, we’ve compiled 10 of our favourite stocks that we think you should watch during 2017’s second quarter. Which do you like?

1) Barratt Developments (BDEV)

Will shares return to 600p highs (+12%) or pull back towards post-EU referendum lows of 400p (-25%)?

• Housebuilder’s post referendum rally continues, although currently challenging 2-month rising lows support
• Brokers are positive-biased, although many still sitting on the fence with ‘Hold’ positions
• Stochastics and Relative Strength Index (RSI) breakdowns from 2-month rising lows support
• Directional Indicators converging bearishly

Broker Consensus: 41% Buy, 47% Hold, 12% Sell

Bullish: Barclays, Overweight, Target 629p, +17%, (2 Mar)

Average Target: 554p, +3.4% (30 Mar)

Bearish: Liberum, Sell, Target 425p, -21% (1 Mar)

N.B. All pricing and consensus data was sourced from Bloomberg on 30 March. Please contact us for a full, up to date rundown.

2) Fresnillo (FRES)

Will shares return to 2000p highs (+30%) or pull back towards December lows of 1100p (-28%)?

• Precious metal miner has tracked Gold price rally from December lows to test 7-month falling highs resistance
• Brokers’ 12-month average target price below current level whilst ratings are negative-biased
• Stochastics overbought while Relative Strength Index (RSI) hover’s just below the bullish extreme
• Directional Indicators converging bearishly

Broker Consensus: 19% Buy, 56% Hold, 25% Sell

Bullish: Credit Suisse, Outperform, Target 1948p, +27%, (25 Jan)

Average Target: 1414p, -8.1% (30 Mar)

Bearish: Goldmand Sachs, Sell, Target 1050p, -32% (9 Mar)

N.B. All pricing and consensus data was sourced from Bloomberg on 30 March. Please contact us for a full, up to date rundown.

3) Imperial Brands (IMB)

Will shares return to 4000p highs (+4.7%) or pull back towards December lows of 3300p (-14%)?

• Tobacco giant has had strong rally from December lows, however is nearing rising support. Will uptrend continue?
• Brokers are positively biased, while 12-month average target price is 11% above current level
• Stochastics and Relative Strength Index (RSI) bouncing from 4 and 3-month support respectively
• Directional Indicators currently showing no bias; bearish kiss or bullish cross?

Broker Consensus: 67% Buy, 24% Hold, 9% Sell

Bullish: Whitman Howard, Buy, Target 5100p, +33%, (21 Mar)

Average Target: 4244p, +11% (30 Mar)

Bearish: RBC Capital Markets, Sector Perform, Target 3400p, -11% (30 Mar)

N.B. All pricing and consensus data was sourced from Bloomberg on 30 March. Please contact us for a full, up to date rundown.

4) Informa (INF)

Will shares return to 760p highs (+18%) or pull back towards EU referendum day lows of 620p (-3.4%)?

• The publisher has sold off since EU referendum. Could there be a bounce from rising lows support?
• Brokers currently have zero ‘Sell’ ratings, while most bearish target suggests 5% upside from current price
• Stochastics recovered sharply from oversold
• Directional Indicators converging Potential bullish cross?

Broker Consensus: 67% Buy, 33% Hold, 0% Sell

Bullish: Panmure Gordon, Buy, Target 875p, +36%, (6 March)

Average Target: 761p, +19% (30 Mar)

Bearish: Liberum, Hold, Target 675p, +5.1% (28 Mar)

N.B. All pricing and consensus data was sourced from Bloomberg on 30 March. Please contact us for a full, up to date rundown.

5) International Consolidated Airlines (IAG)

Will shares return to 2017 highs of 570p (+8.6%) or pull back towards 2016 lows of 340p (-35%)?

• The Airline’s share price has fallen back from March’s 2017 highs to test rising lows support since October
• Broker ratings are positive biased, while 12-month average target price is 12% above current levels
• Stochastics oversold while Relative Strength Index (RSI) faces falling highs resistance
• Directional Indicators diverging bearishly

Broker Consensus: 58% Buy, 36% Hold, 6% Sell

Bullish: Goodbody, Buy, Target 850p, +62%, (27 Feb)

Average Target: 586p, +12% (30 Mar)

Bearish: RBC Capital Markets, Sector Perform, Target 450p, -14% (24 Feb)

N.B. All pricing and consensus data was sourced from Bloomberg on 30 March. Please contact us for a full, up to date rundown.

6) Rolls-Royce Holdings (RR.)

Will shares return to 880p 2016 highs (+16%) or pull back towards 2017 lows of 640p (-15%)?

• Engine manufacturer’s rally from November 2016 lows has now reached 8-month falling highs resistance
• Brokers are negative biased, with 12-month average target price 12% below current price
• Stochastics and Relative Strength Index (RSI) both in narrowing patterns. Break higher or lower?
• Directional Indicators showing no bias; bullish cross or bearish kiss?

Broker Consensus: 17% Buy, 29% Hold, 54% Sell

Bullish: Day by Day, Buy, Target 1037p, +37%, (13 Mar)

Average Target: 667p, -12% (30 Mar)

Bearish: Barclays, Underweight, Target 480p, -28% (20 Mar)

N.B. All pricing and consensus data was sourced from Bloomberg on 30 March. Please contact us for a full, up to date rundown.

7) Tesco (TSCO)

Will shares return to 220p highs (+16%) or pull back towards the referendum day lows of 145p (-23%)?

• Supermarket has fallen from December’s 2016 highs, although has met post-referendum rising lows support
• Brokers are leaning towards negative bias, however 12-month average target price is 8% above current level
• Stochastics overbought while Relative Strength Index (RSI) has broken out from falling highs resistance
• Directional Indicators showing no bias; bearish kiss or bullish cross?

Broker Consensus: 27% Buy, 27% Hold, 46% Sell

Bullish: HSBC, Buy, Target 260p, +37%, (27 Mar)

Average Target: 205p, +7.9% (30 Mar)

Bearish: Goldman Sachs, Sell, Target 150p, -21% (13 Dec)

N.B. All pricing and consensus data was sourced from Bloomberg on 30 March. Please contact us for a full, up to date rundown.

8) Vodafone (VOD)

Will shares return to 240p highs (+14%) or pull back towards February lows of 185p (-12%)?

• Telecoms giant’s share price has failed test of 5-month falling highs resistance. Back to channel floor?
• Brokers are positive biased, with 12-month average target price 10% above current price level.
• Both Stochastics and Relative Strength Index (RSI) have recovered from oversold, now challenging support
• Directional Indicators converging bearishly

Broker Consensus: 47% Buy, 43% Hold, 10% Sell

Bullish: J.P. Morgan, Overweight, Target 280p, +33%, (20 Mar)

Average Target: 232p, +10% (30 Mar)

Bearish: Societe Generale, Sell, Target 155p, -26% (21 Mar)

N.B. All pricing and consensus data was sourced from Bloomberg on 30 March. Please contact us for a full, up to date rundown.

9) Worldpay Limited (WPG)

Will shares return to 320p highs (+9.4%) or pull back towards December lows of 255p (-13%)?

• Payments processor has rallied from December’s lows and broken out of 7-month resistance
• Brokers currently have zero ‘Sell’ ratings, whilst 12-month average target price is 12% above current level
• Stochastics recovered from overbought while Relative Strength Index (RSI) challenging rising lows support
• Directional Indicators converging bearishly

Broker Consensus: 68% Buy, 32% Hold, 0% Sell

Bullish: Goldman Sachs, Buy, Target 400p, +37%, (9 Aug)

Average Target: 329p, +12% (30 Mar)

Bearish: Bryan Garnier, Neutral, Target 278p, -5.0% (8 Mar)

N.B. All pricing and consensus data was sourced from Bloomberg on 30 March. Please contact us for a full, up to date rundown.

10) WPP (WPP)

Will shares return to 1925p highs (+11%) or pull back towards the referendum day lows of 1475p (-15%)?

• Advertising giant saw sharp sell-off after results, however bouncing from support at 1640p. Will rally continue?
• Brokers are showing positive bias, with 12-month average target price is a whopping 14% above current level
• Both Stochastics and Relative Strength Index (RSI) have sharply recovered from oversold
• Directional Indicators converging bullishly

Broker Consensus: 67% Buy, 30% Hold, 3% Sell

Bullish: CM Research, Buy, Target 2231p, +29%, (13 Feb)

Average Target: 1975p, +14% (30 Mar)

Bearish: Natixis, Neutral, Target 1700p, -1.7% (6 Mar)

N.B. All pricing and consensus data was sourced from Bloomberg on 30 March. Please contact us for a full, up to date rundown.

Want to take advantage of the above opportunities right now?

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.

CFDs: Like shares, but more flexible

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)

CFDs are leveraged instruments, but you don’t have to use the leverage

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!

What’s your view?

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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