The stock market outlook for April

31 March 2015

April is one of the most interesting months for investors. Why? Let's start with the fact that for the past decades the two stand-out strong months for the market have been April and December - the two have been switching back and forth as the single strongest month. For the last few years it has been December, but April is not far behind.

Incidentally, this characteristic is not unique to the UK market; a study of 70 markets worldwide found that the strongest months for shares were (in descending order) December, January and April.

On average the stock market rises 1.8% in April, and the probability of a positive return is 70%.

Indeed, since 2003 the market has only fallen three times in April (although this doesn't match earlier performance: from 1971 the market rose in April every year for 15 years - a recent record for any month).

Strong starts

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

The great seasonality significance of April is that it is the last month in the strong part of the six-month cycle (November-April); and therefore investors may be reducing their exposure to equities ahead of May.

The FTSE 100 index has had a tendency to outperform the S&P 500 index in certain months, including April. April is the strongest month for the FTSE 100 relative to the S&P 500, with an outperformance averaging 1.2 percentage points.

This article was written for our sister website Money Observer


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