The week ahead: Countdown to the EU Referendum

calendarThe long-awaited week of the EU referendum has come and on the 23 June the UK will decide if Brexit continues to be a topic high on the agenda for years to come or becomes a mere memory.

Fund Strategy looks at some key events shaping the week and what to expect.

Monday 20 June

  • Facebook shareholders meeting

Facebook investors will vote at their annual shareholders meeting on the proposal of a new class of non-voting stock for the company.

Under the new plans, announced in April, investors buying into Facebook via a “Class C” stock would not have any voting rights.

  • UK Labour leader Jeremy Corbyn to speak about the EU referendum
  • Minutes from Bank of Japan

AJ Bell investment director Russ Mould says the minutes from the BoJ after last week’s meeting, may provide hints as to whether the central bank will further cut rates, increase QE or intervene to weaken the soaring yen.

Tuesday 21 June

  • Costa Coffee and Premier Inn first quarter trading update
  • Flash Purchasing Managers Indices surveys for the EU

Wednesday 22 June

  • Third-quarter update from Debenhams

Commentary on third quarter trading from the department store chain on will be “particularly interesting” for three reasons, says Mould.

He says: “This will be chief executive Michael Sharp’s last set of numbers as he steps down after five years in the hot seat on 24 June. Second, after the collapse into administration of both Austin Reed and BHS, we know trading is tough out there for retailers.

Third, the firm has just announced the appointment of Sergio Bucher as the new boss. He is ex-Nike and Inditex and is joining from Amazon’s fashion arm, so I guess he’s been brought in to ensure Debenhams’ online offering is up to scratch.

When it comes to the third quarter numbers, the benchmark are April’s interims, when like-for-like sales growth was just 1.1% (2.4% in constant currency terms), Mould says.

Thursday 23 June

  • The UK votes!

Following months of market volatility and a slumped currency, not to mention a huge amount of speculation and debate about what a Brexit would mean, UK voters decide whether to remain in the European Union or to vote out.

  • Belgian Courbe Synethetique business confidence survey

Mould says the survey is timely read-through on the day of the EU referendum in the UK.

He says: “The Courbe is traditionally a good indicator of broader European economic and stock market trends. The last reading was -2.8 and the trend has been gently higher in the past few months.”

  • EU referendum

Friday 24 June

  • Results from the UK referendum on EU membership

Mould says the results of the referendum will have “clear” implications for the stock market, bonds and currencies in the UK, EU and potentially worldwide.

Psigma Investment Management head of investment strategy Rory McPherson predicts there’ll be a very narrow victory for a ‘remain’ vote.

McPherson says: “We’ve used the currency weakness to take profits in equities and trim large overseas currency exposure. We’ve bought in and ridden the anticipatory gilt rally and also built up cash reserves – ready to deploy for whatever greets us on June 24th.”

Schroders head of multi-manager Marcus Brookes says after months of speculation on Brexit, this weak financial markets will suddenly react more frequently and violently to data.

He says: “A vote to leave would appear to create the opportunity for the biggest dislocations in financial assets, but our observation is that many of the consensus victims have already been quite weak. Clearly they can weaken further, which needs to remain under consideration.”