FYI | Mar 02 2010
By Chris Shaw
March is a generally positive month for global equities according to Barclays Capital, its research showing only Hong Kong's Hang Seng and India's Sensex indices post negative historical returns for the month, the former delivering its worst average month of the year and the latter its worst median month.
For 2010 Barclays suggests the strongest odds of an advance are with the Shanghai Composite as March tends to be its best month of the year. Barclays gives this index a 73% change of gaining this time around, while US and UK indices and the Nikkei are given odds of between 60% and 68% of gaining. Australia's All Ords is rated a 57% chance of finishing the month higher.
In commodity markets, natural gas is the traditional best performer in March and Barclays sees a 79% change of gains this month, against a 55% chance for the CRB index generally and a 69% chance of oil prices gaining.
Metals generally post flat results for the month and the forecasts from Barclays are for somewhat similar performance this time around. The analysts give gold and silver both 48% chances of gaining while aluminium is at 50%. Copper is the exception, the analysts giving it a 65% chance of moving higher this month.
In foreign exchange markets, Barclays notes March tends to be the worst month of the year for the Australian dollar against the US currency, giving the Aussie just a 44% change of gaining on the greenback this month, while it sees a 63% chance the Aussie ends the month higher against the New Zealand dollar. March tends to be the best month of the year for the AUD/NZD pair.
Elsewhere there is a marginal weakening bias for the US dollar against other major currencies, Barclays estimating the euro has a 56% chance of gaining on the greenback this month and the British pound and yen slightly better than even money chances of ending the month higher.
Also, it may be related to the end of the Japanese financial year on March 31, but March tends to be a bullish month for Japanese rates across the yield curve, so from three-month securities to 10-year bonds Barclays sees a less than 50% chance of yields increasing on Japanese securities this month.
The story is the opposite in the US as March tends to be a bearish month in this market, Barclays giving all treasuries from three-month to 10-years a better than 50% chance of yield gains. Elsewhere, the analysts suggest a flat outlook for yields on 10-year bonds in both the Australian and UK markets, a 55% chance EU 10-year bonds see a yield increase and just a 41% chance for the same outcome for Japanese 10-year bonds.
In terms of the yield curve and relative value, Barclays suggests EU and UK two-year securities are on a five-year narrowing streak, while the highest odds for a widening in relative value terms are two-year EU securities against those of the US.
