All Time Highs Page 1

On the back of a positive French election result and one of the strongest first quarter earnings seasons in recent memories, stock markets on both sides of the Atlantic have traded at multiyear and even record highs.

It’s easy to be put off investing by news of record highs. However, this report will look to ease some concerns by looking at several reasons why this could just be the start, rather than an end, of a stock market rally, as well as providing options for investors looking to profit from market moves in either direction for safe measure.

Why are we currently at all-time highs?

As mentioned above, the recent conclusion of the French Presidential election saw the market-preferred candidate Emmanuel Macron beat his anti-EU rival Marine Le Pen. Macron, a former banker and fervent supporter of the EU, is expected to bring about greater stability in the European bloc, fighting off a wave of populism in global markets. His victory helped push Germany’s DAX to a fresh all-time high as investors let off a collective sigh of relief on expectations that his premiership could see the economic area return to former glory.

Helping stock markets on both sides of the Atlantic is 2017’s record breaking Q1 earnings season, with companies bucking recent weak growth trends to beat expectations. In the US the figures speak for themselves as earnings per share growth reaches 13.3%, the first quarter of double digit growth since Q4 2011. This has helped the S&P 500 to trade above 2,400 points for the first time, alongside all-time highs for the Nasdaq.

What upcoming could influence markets?

The main event which could provide impetus for a further market rally – or even a potential reversal – is of course the upcoming general election on 8 June. Theresa May’s announcement of the snap election on 18 April saw Pound Sterling pop to its highest level in 6 months, although also contributed to the UK 100 ’s worst trading session since Brexit. However, should May’s Conservatives win a significant majority, many believe that the UK will have a stronger position to negotiate the terms of Brexit with the EU with much less anti-Brexit opposition.

Away from politics, markets keenly await the meeting of OPEC and non-OPEC members on 25 May to discuss extending to their 6-month production cut. The Energy sector holds the biggest weight on the UK Index , which could subsequently see any agreement between delegates having a profound impact on the UK’s blue chip index, whilst it may also lend a hand to other commodities to help the heavily weighted mining sector.

Finally, we keep a continued eye on Washington DC and President Donald Trump Markets are still awaiting updates on Tax Reform, Infrastructure Spending and Banking Sector Deregulation. Can ‘the Donald’ deliver on his promises or will his recent dismissal of the FBI chief backfire, creating a legislative backlog in Congress?

Over the page we outline a range of types of stocks that could present attractive trading opportunities, whether you are bullish or bearish on future prospects for stocks markets. Read on to find out more.

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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.

Accendo Markets considers opinions and information contained within the research to be valid when published, and gives no warranty as to the investments referred to in this material. The income from the investments referred to may go down as well as up, and investors may realise losses on investments. The past performance of a particular investment is not necessarily a guide to its future performance. Prepared by Michael van Dulken, Head of Research

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