International markets 2017 1H

The following charts plot the performance of a selection of world markets in the first half 2017.

Domestic currency

International markets 2017 1H

GBP

The following chart plots the GBP-adjusted returns (i.e. these are the returns for a GB pound investor).

International markets (GBP) 2017 1H

USD

The following chart plots the USD-adjusted returns (i.e. these are returns for a US dollar investor).

International markets (USD) 2017 1H

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Currency rate changes 2017 1H

GBP

The following chart shows currency rate changes against GBP for the first half 2017. For example, GBP fell 2.9%% against the Euro.

Currency rate changes against GBP 2017 1H

USD

The following chart shows currency rate changes against USD for the first half 2017. For example, USD fell 7.9% against the Euro.

Currency rate changes against USD 2017 1H

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UK equity indices returns 2017 2Q & 1H

2017 2Q

The following chart plots the performance of UK equity indices in the second quarter 2017.

UK equity index returns 2017 2Q

The data for the chart is given in the following table.

Index TIDM Rtn(%)
FTSE AIM 100 6.3
FTSE AIM All-Share 3.9
FTSE Fledgling 3.7
FTSE SmallCap 2.8
FTSE 250 1.9
FTSE TechMARK All Share 1.6
FTSE TechMARK Focus Index 1.5
FTSE All-Share – Total Return 1.4
FTSE 100 Index – Total Return 1.0
FTSE4Good UK 0.5
FTSE4Good UK 50 0.3
FTSE All-Share 0.3
FTSE 350 0.2
FTSE 100 -0.1
FTSE UK Dividend Plus -1.4

2017 1H

The following chart plots the performance of UK equity indices in the first half 2017.

UK equity index returns 2017 1H

The data for the chart is given in the following table.

Index Rtn(%)
FTSE AIM 100 19.01
FTSE AIM All-Share 14.4
FTSE Fledgling 12.26
FTSE SmallCap 8.59
FTSE 250 6.99
FTSE All-Share – Total Return 5.5
FTSE 100 Index – Total Return 4.69
FTSE TechMARK All Share 3.99
FTSE TechMARK Focus Index 3.72
FTSE All-Share 3.33
FTSE 350 3.14
FTSE4Good UK 2.65
FTSE 100 2.38
FTSE4Good UK 50 2.12
FTSE UK Dividend Plus 1.87
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UK sector indices 2017 2Q & 1H

2017 2Q

The following chart plots the performance of UK FTSE 350 sector indices for the second quarter 2017.

UK sector index returns 2017 2Q

The data for the chart is given in the following table.

Sector TIDM Rtn(%)
Health Care Equipment & Services 11.0
Nonlife Insurance 7.3
Software & Computer Services 6.6
Aerospace & Defense 6.3
Financial Services 6.3
Travel & Leisure 5.4
Food Producers 5.2
Electronic & Electrical Equipment 4.8
Industrial Metals 4.6
Household Goods & Home Construction 4.6
Forestry & Paper 4.5
Real Estate Investment & Services 4.4
General Industrials 4.2
Personal Goods 3.9
Mobile Telecommunications 3.7
Banks 3.7
Life Insurance 3.4
Equity Investment Instruments 3.4
Support Services 2.8
Industrial Transportation 1.1
Real Estate Investment Trusts 0.7
Chemicals 0.5
Beverages 0.2
Industrial Engineering -0.2
Pharmaceuticals & Biotechnology -1.4
Electricity -1.4
Construction & Materials -2.0
Media -2.0
General Retailers -3.6
Tobacco -3.9
Oil & Gas Producers -4.1
Food & Drug Retailers -4.7
Mining -5.7
Fixed Line Telecommunications -7.2
Gas, Water & Multiutilities -7.4
Automobiles & Parts -10.3
Oil Equipment, Services & Distribution -25.3

2017 1H

The following chart plots the performance of UK FTSE 350 sector indices for the first half 2017.

UK sector index returns 2017 1H

The data for the chart is given in the following table.

Sector Rtn(%)
Personal Goods 22.5
Forestry & Paper 20.9
Electronic & Electrical Equipment 17.9
Household Goods & Home Construction 15.1
Aerospace & Defense 13.4
Health Care Equipment & Services 12.3
Financial Services 12.2
Nonlife Insurance 11.0
General Industrials 10.2
Real Estate Investment & Services 10.0
Travel & Leisure 9.8
Industrial Metals 9.7
Support Services 9.3
Beverages 9.2
Tobacco 8.7
Industrial Engineering 8.7
Equity Investment Instruments 8.6
Mobile Telecommunications 8.6
Software & Computer Services 7.8
Life Insurance 6.3
Banks 5.9
Pharmaceuticals & Biotechnology 4.6
Chemicals 4.5
Food Producers 3.9
Industrial Transportation 1.1
Real Estate Investment Trusts 0.9
Mining -0.9
Construction & Materials -1.5
Automobiles & Parts -1.7
Media -2.1
Gas, Water & Multiutilities -3.6
General Retailers -6.4
Electricity -7.1
Food & Drug Retailers -7.7
Oil & Gas Producers -11.9
Fixed Line Telecommunications -18.6
Oil Equipment, Services & Distribution -26.6

 

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The Stock Market in July

After traditional weakness in June, share prices often bounce back in July – making this month a short period of strength in an otherwise weak 6-month period (May to October).

Since 1970 the FTSE All-Share Index has seen an average return of 0.8% in July, with 53% of years seeing positive returns in this month. This makes July the fifth strongest month of the year for shares. As can be seen in the accompanying chart, in recent years the market has been stronger than its longer-term performance. In the last eight years the market has only seen falls in July twice, and the average return in July has been 3.3%. So currently July is on a roll.

Monthly returns of FTSE All Share Index - July (1984-2016)

The average July

In an average July the start of the month tends to be strong ­ the first week of the month is among the top ten strongest weeks in the year. After that, the market has a tendency to drift lower for a couple of weeks until finishing strongly in the final week of the month.

Large caps v mid-caps

July is one of only three months (the others being September and October) where the FTSE 100 tends to out-perform the mid-cap FTSE 250, although the out-performance in July is not significantly large (an average of 0.2 percentage points since 1986). Better is the performance of the FTSE 100 relative to the S&P 500, in sterling terms July is the second-best month for the FTSE 100 (the UK index has out-performed the US index by an average of 1.0 percentage points since 1984).

Sectors

Historically the sectors that have been strong in July are Chemicals, Personal Goods and Real Estate Investment Trusts while weak sectors have been Gas, Water & Multiutilities, Support Services and Beverages.

Shares

On the shares front, companies that have seen strong share performance in July have been: Elementis [ELM], Croda International [CRDA], and Barclays [BARC] – all three shares have seen positive returns in July in nine of the past ten years. Companies that have historically performed weakly in July are: Halma [HLMA], Babcock International [BAB], and Redefine International [RDI].

Diary

July is a busy month for companies announcing their interim results: 28 FTSE 100 companies will be doing so and 47 FTSE 250 companies.

On the economics front: there is the US Nonfarm payroll report on the 7th, and the two-day FOMC meeting starts on the 25th. The New York Stock Exchange will be closed on 4th July.


Article first appeared in Money Observer

Further articles on the market in July.

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UK equities in days around parliamentary elections

The following chart plots the number of times the FTSE All-Share Index has had positive returns in the 7 days around UK parliamentary elections since 1970.

For example, in the 12 elections there have been since 1970 the Index has risen 7 times on the third day, E(-3), before election day E(0).

UK equity performance in days around elections - positive returns

The following chart is similar to the above but plots the average day returns for the Index on each of the 7 days around elections.

For example, in the 12 elections since 1970 the Index has had an average return of 0.1% on the day before, E(-1), the election.

UK equity performance in the days around elections (average returns)

Interestingly, the market  has tended to see positive returns in the days immediately around elections, with the strongest day being election day itself with an average return of 0.6% (perhaps a .relief rally marking the end of the tedious election campaigns?)

The day following elections has a negative average return of  0.04% (as investors realise the ramifications of the election result?)


Further articles on the market and elections.

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The Stock Market in June

June is not usually a good month for investors. The accompanying 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.

Monthly returns of FTSE All Share Index - June (1984-2016)

Putting some numbers to this, in the 47 years since 1970 the market has seen positive returns in June 21 times (45%), with an average month return of -1.0%. In recent years the record is even worse. In the 17 years since 2000 the market has seen positive returns in June just 7 times (41%), with an average month return of -1.6%. Last year saw an unusually positive return in June when the market rose 2.5% (over the turbulent time of the EU referendum).

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.

Sectors

It’s not all gloom in June however, three sectors have gone against the trend and seen consistent strength in the month: Beverages, Oil & Gas Producers and Pharmaceuticals & Biotechnology.

Stocks

FTSE 350 stocks that have also tended to be strong in June are: RPC Group [RPC], NCC Group [NCC], and BTG [BTG]. While stocks that have a track record in the month are Barclays [BARC] and Travis Perkins [TPK]. Barclays has a quite shocking record of performance in June – the worst of any FTSE 350 stock. In the last four years in June Barclays shares have fallen -13%, -14%, -4%, and -24% respectively. In the ten years since 2007 the average return of Barclays shares in June has been -11.1%.

Company results

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.

Diary

This is quite a busy month on the economics front: there is the US Nonfarm payroll report on the 2nd, ECB Governing Council Meeting on the 8th, FOMC interest rate announcement on the 14th, the MPC interest rate announcement on the 15th, and Triple Witching on the 16th.


Article first appeared in Money Observer

Further articles on the market in June.

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FTSE 100 and FTSE 250 Quarterly Review – June 2017

After market close on 31 May 2017 FTSE Russell confirmed the following changes to the FTSE 100 and FTSE 250 indices. The changes will be implemented at the close Friday, 16 June 2017 and take effect from the start of trading on Monday, 19 June 2017.

FTSE 100

Joining: G4S [GFS], Segro [SGRO]

Leaving: Hikma Pharmaceuticals [HIK], Intu Properties [INTU]

FTSE 250

Joining: Coats Group [COA], FDM Group Holdings [FDM]. Melrose Industries [MRO], Pershing Square Holdings[PSH], Sirius Minerals [SXX], TBC Bank Group [TBCG]

Leaving: Allied Minds [ALM], AO World [AO.], BH Macro (GBP) [BHMG], Debenhams [DEB], Keller [KLR], SVG Capital [SVI]

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The Stock Market in May

Sell in May?

One of the most famous adages in the stock market is “sell in May”. And often this can be good advice. However, look at the accompanying chart ­ you can see that the UK equity market has actually had positive returns in May for the past four years! Admittedly, last year the FTSE All-Share Index saw a rise of only 0.2%, but that’s still a positive return.

Monthly returns of FTSE All Share Index - May (1984-2016)

In fact, since 1984 the market in May has seen roughly an equal proportion of positive and negative month returns (the proportion of years with positive returns in May is 51%).

So, why does May have a bad reputation for shares, and why is the saying “sell in May” so popular?

One reason can be seen in the chart. Although the proportion of positive and negative month returns in May are roughly equal, it can be seen that the positive returns in May are relatively small, whereas when the market falls in May it can suffer quite a large sell-off. Since 1970 the average market return in May has been -0.5%, which is the third worst record of all months.

The other reason why investors should take note of “sell in May” is that, longer-term, May marks the start of the under-performing half of the year (May through to October); a period over which share performance can tend to be lacklustre.

The average May

In an average May the market trades fairly flat for the first two weeks of the month, and then prices drift lower in the second half.

FTSE 100 v S&P 500

There are some months that the UK market fairly consistently outperforms the US market. May isn’t one of them. In fact, May is the weakest month of the year for the FTSE 100 Index relative to the S&P 500 Index; on average the UK index under-performs the US by 1.3 percentage points in May.

Diary

Coming up in May we have the May Day bank holiday on the 1st (LSE closed), the two-day FOMC meeting starting on the 2nd, US Nonfarm payroll report on the 5th, MPC interest rate announcement on the 11th, and Spring bank holiday on the 29th (LSE and NYSE closed).

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Sell in May (2017)

An update on the Sell in May Effect (also called the Six-Month Effect, or Halloween Effect in the US).

In the six months Nov 2016 to Apr 2017 (Winter period) the FTSE All-Share Index rose 5.2%. Previously, the Index had risen 10.1% over May 2016 to Oct 2016 (Summer period).

The out-performance of the Winter market over the Summer market was therefore -4.9 percentage points, which does not support the Sell in May Effect.

The following chart shows the out-performance of the FTSE All-Share Index in the Winter period over the previous Summer period since 1982.

Outperformance of winter over previous summer market [1982-2017]

In the 17 years since 2000 the Winter market has outperformed the previous Summer market 11 times, with an average out-performance of 4.6 percentage points.

As can be seen in the above chart, while in the longer-term the Sell in May effect is strong, in recent years it has become less reliable.

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