International markets 2017 1Q

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

Domestic currency

International markets 2017 1Q returns

GBP

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

International markets 2017 1Q returns [GBP]

USD

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

International markets 2017 1Q returns [USD]

 

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UK sector indices 2017 1Q

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

UK sector indices 2017 1Q returns

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

Sector TIDM Rtn(%)
Personal Goods 17.9
Forestry & Paper 15.7
Tobacco 13.1
Electronic & Electrical Equipment 12.5
Household Goods & Home Construction 10.1
Automobiles & Parts 9.5
Industrial Engineering 8.9
Beverages 8.9
Aerospace & Defense 6.6
Support Services 6.3
Pharmaceuticals & Biotechnology 6.1
General Industrials 5.7
Financial Services 5.5
Real Estate Investment & Services 5.4
Mining 5.2
Equity Investment Instruments 5.0
Industrial Metals 4.8
Mobile Telecommunications 4.7
Gas, Water & Multiutilities 4.2
Travel & Leisure 4.1
Chemicals 4.0
Nonlife Insurance 3.5
Life Insurance 2.8
Banks 2.1
Health Care Equipment & Services 1.1
Software & Computer Services 1.1
Construction & Materials 0.5
Real Estate Investment Trusts 0.2
Industrial Transportation 0.0
Media -0.1
Food Producers -1.3
Oil Equipment, Services & Distribution -1.8
General Retailers -2.9
Food & Drug Retailers -3.1
Electricity -5.7
Oil & Gas Producers -8.2
Fixed Line Telecommunications -12.2

 

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UK equity indices returns 2017 1Q

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

UK equity index returns 2017 1Q

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

Index TIDM Rtn(%)
FTSE AIM 100 11.9
FTSE AIM All-Share 10.1
FTSE Fledgling 8.3
FTSE SmallCap 5.6
FTSE 250 4.9
FTSE All-Share – Total Return 4.0
FTSE 100 Index – Total Return 3.7
FTSE UK Dividend Plus 3.3
FTSE All-Share 3.0
FTSE 350 2.9
FTSE 100 2.5
FTSE TechMARK All Share 2.3
FTSE TechMARK Focus Index 2.2
FTSE4Good UK 2.1
FTSE4Good UK 50 1.8

 

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The Stock Market in April

Historically, April has been one of the best months for equities. Since 1970 the average return for the FTSE All-Share Index in the month has been 2.6%, with positive returns seen in 83% of Aprils in the last 47 years. This is the best record, by quite a margin, for any month in the year. And the strong performance has continued in recent years. Since 2000 the average month return for the index has been 2.0% and, as can be seen in the accompanying chart, the market has only fallen in April in five years since 2000.

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

The average April

The market often gets off to a strong start in the month – the first trading day of April is the second strongest first trading day of all months in the year. The market then tends to be fairly flat for the middle two weeks and then rising strongly in the final week.

Investors need to make the most of April. After this month the market enters a six-month period when equities have tended to tread water (the Sell in May effect).

Sectors

The FTSE 350 sectors that tend to be strong in April are: Electronic & Electrical Equipment, Industrial Engineering, and Personal Goods; while the weaker sectors are Household Goods, Mining, Mobile Telecommunications, and Software & Computer Services.

Stocks

At the stock level, the four FTSE 350 with the best Aril returns over the past ten years are: JD Sports Fashion [JD.], Ashmore Group [ASHM], Aberdeen Asset Management [ADN], and Temple Bar Investment Trust. The shares of all four of these companies have risen every year in April since 2007. The FTSE 350 stocks with the weakest record in April have been: Balfour Beatty [BBY], RELX [REL], and BAE Systems [BA.].

FTSE 100 v S&P 500

This is the strongest month for the FTSE 100 relative to the S&P 500 (in sterling terms), the former out-performs the latter by an average of 1.3 percentage points in April ­ the UK index has out-performed the US index (in sterling terms) in April in 13 of the past 15 years.

Holiday Effect

It’s Easter on the 16th so the LSE will be closed on the 14th (Good Friday) and 17th (Easter Monday). A famous anomaly in stock markets is that prices tend to be strong on the day preceding and the day following a holiday. This effect is strongest in the year around the Easter holiday.


Article first appeared in Money Observer

Further articles on the market in April.

 

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U.S. Tax Day

Tax Day in the United States refers to the day by which individuals must submit income tax returns to the federal government.

In the past Tax Day has moved around a bit, but since 1955 it has been fixed at 15 April. Although there are exceptions due to the close proximity of the Emancipation Day holiday in Washington State D.C. Such that since 2007 when 15 April falls on a Friday then Tax Day is moved to the following Monday, and when 15 April falls on a weekend Tax Day is moved to the following Tuesday.

This year, 2017, 15 April is a Saturday and so Tax Day will be Tuesday, 18 April.

It is probably not too controversial  a claim that most people dislike filling in forms and paying taxes. Could this dislike affect individual investors attitude to risk around the time of Tax Day and. if so. could that in aggregate be sufficient to influence equity returns around this period?

Let’s see…

The following chart plots the proportion of weeks that saw positive returns in the S&P 500 Index for the two weeks before Tax Day and for the one week following Tax Day for all years since 1955. For example, the S&P 500 had positive returns in the week two weeks before Tax Day in 69% of years since 1955.

S&P 500 in weeks around Tax Day [1955-2016] - Positive week returns

As can be seen, over the three-week period there was a moderate decline in the proportion of positive weekly returns.

The following chart looks at the same period and weekly frequency, but plots the average weekly returns.

S&P 500 in weeks around Tax Day [1955-2016] - Average week return

Here we can see relatively high returns two weeks before Tax Day, although this overlaps with the start of April which is usually a strong period for equities anyway. The week leading up to Tax Day is relatively weak, and then there’s something of a small relief(?) rally in the week following Tax Day.

Let’s now focus in on the days around Tax Day.

The following chart plots the proportion of days that saw positive returns in the five days around Tax Day. For example, since 1955 the S&P 500 Index has seen positive returns on Tax Day itself (TD(0D)) in 67% of years.

S&P 500 in days around Tax Day [1955-2016] - Positive day returns

Historically we can see that returns have been depressed leading up to Tax Day, with the strongest returns in the 5-day period seen on Tax Day itself.

The following chart looks at the same period and daily frequency, but plots the average daily returns.

S&P 500 in days around Tax Day [1955-2016] - Average day return

The same behaviour profile can be seen as in the previous chart. The weakest average daily returns in the period have been seen on the trading day two days before Tax Day. While the strongest average daily returns have been on Tax Day itself (with an average daily return ten times the average daily return for all days since 1955).

Conclusion

The results here are not strong, but there is some evidence that equities are relatively weak in the days immediately before Tax Day, but the market is strong on Tax Day itself.

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FTSE 100 and FTSE 250 Quarterly Review – March 2017

After market close on 1 March 2017 FTSE Russell confirmed the following changes to the FTSE 100 and FTSE 250 indices. The changes will be implemented at the close Friday, 17 March 2017 and take effect from the start of trading on Monday, 20 March 2017.

FTSE 100

Joining: Scottish Mortgage IT [SMT], Rentokil Initial [RTO]

Leaving: Capita [CPI], Dixons Carphone [DC.]

FTSE 250

Joining: Northgate [NTG], Sanne Group [SNN], Syncona [SYNC]

Leaving: Brown N [BWNG], CMC Markets [CMCX], International Personal Finance [IPF]

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The Stock Market in March

What can we expect from shares as move into spring? Well, since 1984 the market has had an average return of 0.5% in March, with returns positive in 55% of all years. This ranks March seventh among months of the year for market performance. Although as can be seen in the accompanying chart, negative returns have been seen in March with increasing frequency in recent years.

Average month chart for March [1985-2016]

The general trend for the market in March is to rise for the first three weeks and then fall back in the final week – the last week of March has historically been one of the weakest weeks for the market in the whole year.

Large cap v small cap stocks

Generally, small cap stocks outperform large cap stocks at the beginning of the year, and March marks the final month of the three-month period when the FTSE 250 strongly out-performs the FTSE 100. In March on average the FTSE 250 has out-performed the FTSE 100 by 0.9 percentage points.

Sectors

The sectors that tend to be strong in March are: Aerospace & Defense, Financial Services, General Retailers, Industrial Engineering, and Oil & Gas Producers, Oil Equipment. While weak sectors have been: Gas, Water & Multiutilities, Health Care Equipment & Services, and Nonlife Insurance.

Stocks

While, for stocks, the FTSE 350 shares that have performed the best over the last ten years in March are: Clarkson [CKN], Petrofac Ltd [PFC], and Intertek Group [ITRK], while the weakest shares have been Vectura Group [VEC], Renishaw [RSW], and Lancashire Holdings Ltd [LRE].

March is the busiest month of the year for FTSE 100 companies paying dividends. And it’s also a busy month for company announcements: the busiest for FTSE 250 companies in the year with 71 companies announcing their prelims this month (along with 24 FTSE 100 companies).

Aside from stocks, March has often been a weak month for gold and a strong month for oil.

The results of the quarterly FTSE 100 index review will be announced on the 1st; at the time of writing Capita and Dixons Carphone look candidates to be booted out, replaced by Scottish Mortgage IT and Weir Group.

Diary

Elsewhere on the diary front we have: 3rd – Nonfarm payroll report, 14th – Two-day FOMC meeting starts, 15th – Chancellor’s Budget, 16th – MPC interest rate announcement, 17th – Triple Witching, 20th – FTSE Index series quarterly changes effective, 26th – Daylight Saving Time starts.


Article first appeared in Money Observer

Further articles on the market in March.

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The Stock Market in February

Since 1970 the average month return of the FTSE All-Share Index in February has been 1.6%, with the month seeing positive returns in 64% of years. But a glance at the accompanying chart will show quite how strong the market has been in February in recent years.

Since 2009 the market has been up every February, and since 1994 market has only seen significant negative returns in three years. There’s no obvious reason why the market has been so strong in recent years in this month; although one possible explication might be that, also in recent years, shares have been weak in January and so they experience a bounce back rally in February.

Average month chart for February [1985-2016]

In an average February shares tend to rise strongly on the first trading day, then trade flat for a couple of weeks, before gaining strongly in the middle of the month and finally drifting off slightly to month end.

Mid-cap outperform large-cap stocks

A feature of February is that, with January, it is the best month for mid-cap stocks relative to the large caps. Since 2000 on average the FTSE 250 Index has out-performed the FTSE 100 Index by 1.6 percentage points in this month, and in that time the large cap index has underperformed mid-caps in February in only four years.

FTSE 100 outperforms S&P 500

On the international front, February is one of the four months in the year that the FTSE 100 Index has historically out-performed the S&P 500 Index. Since 1999 the UK index has underperformed the US index in Fenruary in only three years. Although the out-performance is somewhat attenuated once currency is taken into account as GBPUSD is historically weak in February.

Stocks

In the last ten years FTSE 350 shares that tended to be strong in February are: Hunting [HTG], Provident Financial [PFG], and Anglo American [AAL]. While shares that have tended to be weak in the month are: AstraZeneca [AZN], Workspace Group [WKP], and Vectura Group [VEC]

It’s a busy month for analysts as there are more FTSE 100 results announced during the month than any other ­ 36 companies announce their prelims in February (as do 55 FTSE 250 companies).

Aside from shares historically this has been a strong month for gold and silver.


Article first appeared in Money Observer

Further articles on the market in February.

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Chinese New Year – year of the rooster

This coming Saturday will be the start of the Chinese New Year.

The following chart plots the average performance of the S&P 500 Index for each animal year since 1950. For example, Ox years started in 1961, 1973, 1985, 1997, 2009; and the average performance of the market in those (Chinese) years was +14.0%.

NB. The Chinese calendar is based on the lunar year cycle and so performance has been calculated for each lunar year – not the corresponding calendar year.

Chinese calendar and S&P 500 [1950-2017]

The Chinese New Year starting this Saturday will be the Year of the Rooster!

This is not necessarily good news for investors. Since 1950 rooster years have had the worst average returns of the S&P 500 Index of any of the Chinese zodiac animals. Over the last 50 or so years the average lunar year return for rooster years has been -4.1%.

The year just ending was the year of the monkey. On average monkey years have seen an S&P 500 return of 9.8%. In the monkey year just passed the actual S&P 500 return was 22.5%.


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A very average start to 2017

The following chart plots the daily returns of the FTSE 100 Index for the nine days around Christmas and New Year.

The blue bars plot the average daily returns of these days for the period 2000-2016. The orange bars plot the daily returns for the last nine days.

FTSE 100 Index daily returns around Christmas and New Year [2017]

As can be seen the actual daily returns for the last nine days have been on the whole pretty close to the average daily returns seen for the last 16 years..

  • Strong returns have been seen on the trading days following Christmas and New Year.
  • After the first day after New year, returns have trailed off (days 8 and 9 in the chart).
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