FYI | Apr 03 2012
– April usually a good month for equities
– Energy prices also tend to increase
– Forex markets mixed this month
– Fixed interest markets also mixed
By Chris Shaw
Monthly seasonal trends for equities are generally positive in April according to technical analysts at Barclays Capital, with the month the best of the year for Australia's All Ords and France's CAC index.
April is also the best month for Germany's DAX and the Dow Jones as measured by mean returns and the best for Switzerland's SMI index in median return terms. Barclays gives all major indexes a better than 50% chance of posting a gain for the month, ranging from odds of 56% for India's Sensex to 75% for the All Ords.
In commodity markets, the analysts note energy tends to be the best market in April, with West Texas Intermediate (WTI) prices tending to rise by nearly 2.75% on average for the month. While silver's median returns are the worst for the month, Barclays suggests aluminium offers the lowest odds of an advance at 38%, against silver at 44%.
Other commodities offer positive odds of an advance, ranging from copper at 52% to gold at 56% and natural gas at 67%. WTI is given 57% odds of an advance by the analysts at Barclays.
In foreign exchange markets performance in April tends to be more mixed, with the New Zealand dollar generally a steady performer against the US dollar and South Africa's rand the star performer overall relative to the greenback.
Against the US dollar this month Barclays ascribes odds of an advance for the major currencies of 59% for the British pound, 54% for the Australian dollar and the yen and 63% for the Kiwi currency, against essentially even money odds for the euro. The euro is given a 54% chance of gaining on the yen, while the Australian dollar is regarded as unlikely to post gains against its New Zealand counterpart.
For fixed interest markets, Barclays notes April tends to be the worst month of the year as measured by mean returns for US and Swiss 10-year bonds and Bunds, with all given a better than 50% chance of a yield increase this month.
Australian and New Zealand 10-year bonds are both given a 48% chance of a yield gain in April, while at the shorter end most securities apart from 3m Sterling and 3m EuroYen securities are given better than 50% chances of yield gains.
The standout in yield curve terms of the US 2s10s curve, which tends to steepen the most in average terms. In contrast, the Japanese 2s10s curve is the only yield curve that tends to flatten in April. A widening in relative value trend dominates the month, Barclays noting the most likely to see a widening are JPvUS 2s and JPvEU 2s.
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