Despite the surge in risk assets and bookies' odds, opinion polls show the Leave and Remain campaigns still neck and neck ahead of Thursday’s U.K. referendum on EU membership. Here are some key events that could drive market sentiment in the days and weeks ahead.
"Leave" odds have plunged in recent days (post Jo Cox' death)
But, as Bloomberg details below, there is a lot to come...
JUNE - AHEAD OF VOTE
- 20: Result of Italy regional elections; Five Star Movement candidates won in Rome and Turin mayoral elections NOTE: Peripheral spreads widened last week ahead of the U.K. vote amid concern about what Brexit would mean for the future of the EU; domestic political risks add to Carmignac’s caution on bonds in the periphery markets
- 20: Leader of the U.K. opposition Jeremy Corbyn to answer questions on Sky
- 21: Germany’s Constitutional court to release ruling on ECB’s OMT program at 10 a.m.
- 21: BBC hosts TV debate on referendum; C. Suisse says it may be key market event, citing events before the Scottish referendum in 2014
- 21: EU Referendum Survey published by NatCen Social Research; Jefferies analysts say could be most important survey as combines online and phone polls but won’t be based on responses of volunteers
- 21: Second additional BOE ITLR operation around referendum; banks allocated GBP2.46b at the first operation vs avg allocation of GBP2.95b in prior six
- 22: Channel 4 TV debate
JUNE 23-24 - VOTING AND COUNT
June 23 7 a.m.: Polls open
- Opinion polls based on voter intentions may be released during the day
10 p.m.: Polls close; there won’t be an exit poll
- 382 counting areas are due to report
June 24 12.30 a.m.: One of the earliest constituencies to declare will be Sunderland; a close result there would suggest the remain camp has won, says University of East Anglia academic Chris Hanretty
- The remain vote is likely to look “high” relative to the eventual outcome in the early hours, JPMorgan analysts say based on modeling by the University of Bristol’s Ron Johnston
4 a.m.-5 a.m.: Around 80% of authorities are expected to have made a declaration; the Brexit count is much less likely to deviate materially from the ultimate result at this stage, they say
Around 7 a.m.: the final three results are due; once the final area has declared, Chief Counting Officer Jenny Watson will formally announce the national result in Manchester
JUNE - AFTER THE REFERENDUM
The tone of the debate over EU membership within the U.K.’s ruling party suggests the fates of PM David Cameron and Chancellor of the Exchequer George Osborne are now tied to the outcome.
Domestic politics could also impact the tone of negotiations with the EU and market sentiment, analyst at UBS said at a conference in London last week
- 24: If the U.K. votes to leave, central banks and analysts expect market volatility; ECB Governing Council member Ewald Nowotny says the ECB is ready to provide liquidity, while the SNB and BOJ have said central banks are in regular contact
- Commerzbank expects concerted FX intervention on any Brexit
- 24: The results of the ECB’s first TLTR0-II operation will be released; with banks already flush with excess liquidity expectations of additional take-up are low, although Pictet WM economist Frederik Ducrozet said the referendum adds some upside risk
- 25: EU leaders could take the unprecedented step of calling an emergency summit without British representation
- 26: Spain holds fresh elections with no clear winner expected; some polls suggest the merged left wing Unidos Podemos may take second place; Brexit could be a game changer as it may persuade undecided voters to support more moderate parties, UniCredit analysts say
- 27: Commerzbank says the ECB could step up its CSPP program during the initial period of uncertainty, damping the fallout but not completely shielding EUR credit from widening
- 27: EC’s College of Commissioners may convene ahead of the summit
- 28: BOE holds third Additional ITLR Operation
- 28: EU summit: U.K. PM may trigger the Lisbon Treaty’s Article 50 -- the never-before-used law to start the exiting process
- 14: BOE rate decision, minutes
If U.K. votes to leave, Danske expects BOE to cut rates to zero, buy assets through its APF program; difficult to say when and how much as would depend on how financial markets react, Mikael Olai Milhoj said in emailed comments
Given Carney has said an exit could lead to recession, the Bank could ease as soon as this month, he added
- 21: ECB rate decision
At the June meeting, Draghi said downside risks include the referendum, adding the Bank is ready for all contingencies
- 27: Fed rate meeting; 6% probability of 25bps rate increase, WIRP shows, down from a higher than 50% likelihood as recently as the start of this month
U.K. Chancellor George Osborne said the country would need an emergency budget within two months of a vote for Brexit; leave campaigner Michael Gove said there wouldn’t be any need for an austerity budget.
57 of the ruling Conservative Party MPs said Osborne’s position would be untenable if he tried to implement the proposal
- 1: U.K. mfg PMIs
- 3: U.K. composite PMIs; if PMI data were to show contraction, that would focus the minds of policymakers, UBS analysts said
- 17: Fed releases July minutes
- 18: ECB accounts
Italian referendum on constitutional reform will take place this month.
Barclays analysts say without reform, Italy faces the risk of political upheaval, pointing out the country’s PM Renzi has repeatedly said he will step down if it isn’t approved.
NEXT YEAR AND BEYOND
- April 23: First round of France’s presidential election
- May 7: Second round of French presidential election
- August: Earliest Germany could hold elections; latest is Oct 22
- Eurasia’s Mujtaba Rahman says both countries will want to go into their elections with a clear position on how the EU will work without Britain and a roadmap for its future
JUNE 2018: If Cameron triggers Article 50 in June 2016 as many expect, a deal on post-departure relations will have to be concluded by the end of the two-year deadline at the latest
Any extension, if no agreements have been made, would need unanimous approval by all member countries