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Where to look for profits after the Brexit decision today!
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Loading...The UK negotiators have entered into an agreement with the European Union to leave the bloc and on Wednesday Prime Minister Teresa May will try to win the trust of his cabinet and later that of the parliament. For investors, a deal would eliminate one of the biggest problems over the European markets after the vote in 2016.
Of course, there is currently no agreement yet, and the decision of the parliament remains a mystery. It is too early to sigh of relief, but that could mean a few things about the British markets. Let's look at them:
FX market
Today will be the "time of pounds". The current price behavior of GBP indicates that the deal is still not certain and accumulates a large volume of pending positions in both directions. For this reason, a large number of city traders are of the opinion that declaring a deal or a successive failure will have a huge impact on GBP and, above all, GBP/USD.
"If the deal is considered favorable, I think the sterling can quickly jump to 1.4000, and if it is negative, it will test the latter around 1.2000," said Roger Jones, Stocks Trading's head of London & Capital.
Bonds
Bond bulls are back in the game, as signing a possible deal for Brexit will stabilize the economy, which in turn will allow the central bank to continue raising interest rates. Yield continues to rise, as rumors have a strong impact.
Shares
Closing the Brexit saga will have a strong positive impact on the small capitalization shares included in the FTSE250 and Stoxx Europe 600.
We can really look for the best trades in the stock, since the Brexit vote only British companies are down. What is interesting here is that the drop in their value is entirely speculative, and this implies a strong Long Impulse, given that Teresa May succeeds in pushing the Brexit deal.
The graph above shows that the reason for the decline is the massive withdrawal of capital by hedge funds after Brexit. A soft and orderly Brexit could contribute to global investment growth in the UK and the EU.
A look at the sectors most affected by the referendum shows where we can look for the hottest deals.
To date, the worst performers were the property, retail and banking sectors, while the biggest gainer was made by energy and tobacco exporters.
Source: Bloomberg Finance L.P.
Charts: Used with permission from Bloomberg Finance L.P.
Trader Petar Milanov Read more:
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