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

Further articles on the market in June.

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