FYI | Apr 01 2008
By Chris Shaw
As tentative signs of a recovery or at least a stabilisation in equity prices continue to emerge investors can take heart from the fact the seasonal trend for stocks in April is positive, Barclays Capital noting most major markets enjoy a positive skew this month.
The Australian market is traditionally one of the best performers and has a median return of +2.96%, Barclays suggesting it has the best odds of posting a gain this month at around 79%. The Japanese Topix Index is on a three year losing streak but may end that this year as the group gives it a 64% chance of ending the month higher, while it estimates the major US indexes have 60-70% chances of gaining and the UK’s FTSE 100 has a 71% chance of registering a positive move.
Monthly trends in commodities prices are more mixed with natural gas the best performer and aluminium the worst, Barclays seeing these trends as likely to continue this year. The group estimates natural gas has a 65% chance of gaining while aluminium is given just a 35% chance.
Copper stands to fare better and is rated a 52% chance of moving higher, while the group suggests gold has a 58% chance, oil is 50-50 and silver has only a 40% chance of gaining in April.
The New Zealand dollar is a traditionally strong performers in April and generally rallies against both the US and Australian dollars, Barclays ascribing 60-70% chances of the same happening this year. The euro is given a less than 50% chance of gaining against the other major currencies while the group sees the US dollar as doing little against most major currencies over the course of the month.
Fixed interest shows some divergence between countries with Barclays giving US 5-year and 10-year bonds a 59% chance of posting yield gains this month against just a 37% chance for Aussie 10-year bonds, while Canadian 10-year bonds are considered the most likely to show a gain with a 72% chance. Less likely are yield advances in the EU and New Zealand, the former given a 53% chance of higher yields and the latter a 48% chance.
In terms of yield curves Barclays notes the monthly trend is for curves to steepen in the US, EU and the UK, though not in Japan. Relative value would suggest the US 2-year bonds should outperform the UK 2-year bonds, the group seeing a 56% chance of this spread widening.
