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

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The Stock Market in June

A quick glance at the accompanying chart (showing the monthly returns of the FTSE All-Share Index in June since 1984) shows that this is not a good month for shares. Historically, the May-June period has been the weakest two-month period in the year for the equity market.

Monthly returns of FTSE All Share Index - June (1984-2015)

In the nine years since 2007 the market has only risen in June in one year ­ the average June return over those nine years is -2.8%. And in June last year the index fell 6.%! This dismal record makes June the stand-out worst month for shares in recent years.

Over the longer term the record is a little better, since 1970 the average return in June has been -1.1%, but also over this period it is the only month in the year with more negative returns seen in the month than positive returns.

So, not much cheer to be expected for shares this month.

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.

Regarding sectors, despite the overall market weakness in June, three sectors have gone against the trend and seen consistent strength in the month: Beverages, Oil & Gas Producers and Pharmaceuticals & Biotechnology. But while many sectors not surprisingly experience weakness in June, none are consistently weak over many years.

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 ECB Governing Council Meeting on the 2nd, US Nonfarm payroll report on the 3rd, FOMC interest rate announcement on the 15th, followed the next day by the MPC interest rate announcement on the 16th. And not to forget Triple Witching on the 17th.


Article first appeared in Money Observer

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Strong/weak sectors in June

Strong sectors

The table below lists the sectors that have historically out-performed the market in June.

Sector TIDM
Beverages
Oil & Gas Producers
Pharmaceuticals & Biotechnology

Weak sectors

There are no sectors that have been consistently weak in June.

 

 

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The Stock Market in June

While the temperature may be rising in June, this is not usually the case for share prices. Generally, the market in June is even weaker than it is in May – making this a rather dismal period of the year for investors.

On average the market has fallen 0.9% in June; and the probability of a positive return in the month is a lowly 39% – which ranks it 11th of all months in the year. Since year 2000 the situation has been even worse: the average return in the month has been -1.7%; the market has only risen one June in the past eight years. And, as can be seen in the accompanying chart, the market falls in June can be quite large; the market has fallen over 3% in June in eight years since 1982.

Monthly returns of FTSE All Share Index - June (1984-2014)

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.

Shares

Despite the general market weakness, June has been good for the shares of Synergy Health and Ted Baker – the two strongest FTSE 350 stocks over the last ten years in this month. In fact, Synergy Health has had positive returns for June every year for the past ten. By contrast, the five weakest stocks in June have been: Barclays, Travis Perkins, Bodycote, Schroders and Morrison Supermarkets – all of which have fallen in June in nine of the past ten years. An equally-weighted portfolio of the two strong stocks would have out-performed an equally-weighted portfolio of the five weak stocks by an average of 12.4 percentage points each June.

Sectors

At the sector level, three sectors have been historically strong this month: Beverages, Oil & Gas Producers and Pharmaceuticals & Biotechnology; while there have been no sectors that have been consistently weak.

Diary

June is the quietest month for results from FTSE 100 companies – just two companies making announcements this month. So an easy month for analysts!

This is quite a busy month on the economics front: there is the MPC interest rate announcement on the 4th, the US Nonfarm payroll report on the 5th, and the two-day FOMC meeting starts on the 16th. Triple Witching is on the 19th.

Finally, note that the FTSE 100 quarterly index review announcement will be made on the 4th. At the time of writing the stock most likely to be ejected from the FTSE 100 Index is Sports Direct International, to be replaced by Inmarsat.


Article first appeared in Money Observer

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First trading day of June

Next Monday will be the first trading day (FTD) of June.

Since 1984 the FTSE 100 Index has on average risen 0.21% on the June FTD, with the month’s return being positive in 55% of years.

The following chart shows the returns for every June FTD since 1984.

First trading day of June (1984-2014)

 

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Shares that like/dislike June

Shares that like June

The following table lists the three FTSE 350 shares that have the best returns in June over the last ten years. For example, Synergy has an average return of 11.1% for the month of June. All stocks have risen in June for at least eight of the past ten years.

Company TIDM Avg(%)
Synergy Health 11.1
Ted Baker 4.1
RPC Group 5.2

 Shares that dislike June

The following table lists the five FTSE 350 shares that have the worst returns in June over the last ten years. For example, Barclays has an average return of -7.8% for the month of June. All five stocks have fallen in at least nine of the past ten years in June.

Company TIDM Avg(%)
Barclays -7.8
Travis Perkins -7.1
Bodycote -5.6
Schroders -4.0
Morrison (Wm) Supermarkets -3.6

An equally-weighted portfolio of the above strong June stocks would have out-performed every year an equally-weighted portfolio of the above weak June stocks by an average of 12.4 percentage points in June for the past ten years.

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Last trading day of June

Today is the last trading day (LTD) of June.

Since 1984 the index average return on the June LTD has been 0.18%, which makes it the third strongest month LTD of the year. The probability of a increase on the June LTD is 67%

The following chart shows the FTSE 100 Index returns for every June LTD since 1984.

Last trading day of June (1984-2013) [2014]

 

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Average market behaviour in June

The following chart plots the average performance of the FTSE 100 Index during June since 1984 (more info on this type of char).

Average month chart - June (2014)As can be seen, historically the market has on average generally been flat for the first two and a half weeks of June, and then slides in the following week.

May 2014

The following chart shows the average performance of the market in May (1984-2013) and overlays the actual performance in May 2014.

Average month chart - May overlay May 2014 (2014)In May 2014 the market traded in-line with the historic pattern in the first part of the month: strong for the first 10 days, then weakening in the following few days. But in 2014 the market was unusually strong in the final week.

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Strong/weak sectors in June

Strong sectors

The table below lists the sectors that have historically out-performed the market in June.

Sector TIDM
Beverages
Oil & Gas Producers
Pharmaceuticals & Biotechnology

Weak sectors

There have been no consistently strong or weak sectors in June.


See also

 

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The Stock Market in June

This is not usually a good time of the year for the stock market – the weak month of May is followed by the even weaker month of June. In recent years, on average, the market has fallen 0.8% in June; and the probability of a positive return in the month is a lowly 40%. This makes June the second weakest month of the year for shares.

Monthly returns of FTSE All Share Index - June (1982-2013)The market has only risen one June in the past seven years. And the market falls in June can be quite large – as can be seen in the accompanying chart; the market has fallen over 3% in June eight times since 1982.

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.

Stocks

Bucking the trend in June though has been Halma and Synergy Health; the two strongest FTSE 350 stocks over the last ten years in this month. In fact, Synergy Health has had positive returns for June every year for the past ten. By contrast, the two weakest stocks have been Barclays and Vesuvius (formerly Cookson Group), both of which have fallen in June in nine of the past ten years.

Sectors

At the sector level, three sectors have been historically strong this month: Beverages, Oil & Gas Producers and Pharmaceuticals & Biotechnology; while there have been no sectors that have been consistently weak.

Company announcements

June is the quietest month for results from FTSE 100 companies – just two companies making announcements this month. So an easy month for analysts!

Diary

This is quite a busy month on the economics front: there is the MPC interest rate announcement on the 5th, the US Nonfarm payroll report on the 6th, and the two-day FOMC meeting starts on the 17th. Triple Witching is on the 20th.

Finally, note that the FTSE 100 quarterly index review announcement will be made on the 4th. Previously, these announcements were made the Wednesday after the first Friday of the month, but from March 2014 it became the Wednesday before the first Friday in the month. The implementation date for the changes hasn’t changed, it is still the third Friday of the month.


Article first appeared in Money Observer

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