FYI | Jun 03 2008
By Chris Shaw
The end of the Australian financial year often means some selling of shares for tax loss purposes in June, with enough of an impact so that the Australian share market historically loses ground this month. As a result Barclays Capital’s monthly seasonal trends analysis gives the Australian market a less than 40% change of posting gains this June, while the Sensex has a better than 70% chance and the Nikkei and TOPIX have better than 60% chances of ending the month higher.
US equity markets are seen as even money or better with respect to posting gains, while the FTSE and the Toronto Stock Exchange both are given a 46% chance according to the group and the JSE a 42% chance. In terms of median gains the best results tend to be from the Sensex and the Shanghai Composite indices.
June is not usually a good month for commodity prices but Barclays notes copper is an exception, posting median returns of just over 2% and given a 59% chance of closing the month higher this year. In contrast it is historically a tough month for silver prices and Barclays sees only a 33% chance of the metal gaining this month, compared to 43% for gold and 48% for oil.
In the currency markets June tends to be a good month for the euro as Barclays notes the currency tends to gain against a wide range of other currencies, in particular the yen. The trend is expected to hold this year as the group gives the euro a 54% change of gaining on the greenback, 65% against the British pound and 57% against the yen.
In contrast the US dollar is seen as likely to struggle, with a 46% change of gaining against the Aussie dollar, the yen and the pound, while the New Zealand dollar has an almost even money change of strengthening against its US counterpart.
For bonds the group notes June is traditionally a bearish month for Japanese securities and its bonds are again expected to struggle, while in contrast it is usually a bullish month for US debt securities. Euro 10-year bonds are seen as a 53% chance of a yield increase, while for the same securities in Australia the group estimates there is a 48% chance of yields gaining and in New Zealand a 43% chance. This compares to a 46% chance for US 10-year bond yield gains.
