A quick glance at the accompanying chart shows that June is not usually a good month for equities. The chart shows the month returns for June of the FTSE All-Share Index from 1984; one can easily see the market falls more often than it rises in June. And when the market does decline, the falls can be quite large, whereas the positive returns are usually only modest.
In the 48 years since 1970 the market has seen positive returns in June 21 times, with an average month return of -1.0%. In recent years the record is even worse. In the 18 years since 2000 the market has seen positive returns in June just seven times (36%), with an average month return of -1.7%. Last year continued the trend, with a -2.8% fall in the market in June.
Not surprisingly June has the second worst record for equity returns of all month. And the May-June period has been the weakest two-month period in the year for the market.
The average June
In an average June the market starts strong, hitting its month high on the second or third trading day, but prices then drift down steadily for the rest of the month, although the market ends the month on a positive note – the last trading day is the second strongest in the year.
Over the last ten years FTSE 350 stocks that have tended to be strong in June are: BTG [BTG], RPC Group [RPC], Halma [HLMA], Telecom plus [TEP], and Ted Baker [TED]. While stocks that have a poor track record in the month are: Barclays [BARC], Thomas Cook Group [TCG], Grafton Group [GFTU], Travis Perkins [TPK], and Marston’s [MARS]. Just two stocks in the FTSE350 have fallen in every June for the past ten years: Barclays [BARC] and Bodycote [BOY]; over this period the average June return for Barclays shares has been -10.5%, the lowest average return for any FTSE350 stock..
Not much action on the results front this month, June is the quietest month for results from FTSE 100 companies – just two companies making announcements this month.
This is quite a busy month on the economics front: there is the US Nonfarm payroll report on the 1st, the FOMC interest rate announcement on the 13th, ECB Governing Council Meeting on the 14th, and the MPC interest rate announcement on the 21st. There’s Triple Witching on the 15th. And on the 15th the announcement will be made of any changes in the FTSE 100 and other FTSE indices.
Article first appeared in Money Observer
Further articles on the market in June.