FYI | Aug 02 2010
By Chris Shaw
Seasonal trends for August suggest positive share price performance in Australia, Barclays Capital noting the All Ordinaries is on an eight-year bullish streak for the month. The group sees the market as having a 70% chance of an advance this month, second only to South Africa's JSE Index at 73%.
Median returns for US equities tend to be higher than for European equities in August and the expectations of Barclays reflect this, as while the Dow Jones is given a 59% chance of advancing and the S&P500 a 57% chance, Germany's DAX is given a 58% chance and France's CAC40 just a 43% chance of ending the month higher.
Asian shares may also find the going tougher, Barclays giving the Nikkei just a 50% chance of gaining, the Hang Seng a 48% chance and the Shanghai Index a 47% chance of finishing the month higher.
In the foreign exchange market August tends to be the most bearish month of the year for the Australian dollar against its New Zealand counterpart. AUD/NZD is given only a 40% chance of gaining this month.
The Aussie dollar is also given a less than even money chance of gaining against the US dollar in August, while the US itself is a 49% chance of gaining against the euro and just a 44% chance of gaining on either the Canadian dollar or Japanese yen.
August appears a mixed month for the euro, as Barclays suggests while there is a 59% chance of the currency gaining on the British pound, there is just a 46% chance of ending the month higher against the yen.
Among commodities, Barclays notes West Texas Intermediate has the highest odds of an advance this month at 59%, August being a month where the average and median returns for oil are typically high.
Natural gas and gold are given 53% chances of ending August higher and copper a 50% chance of gaining for the month, while aluminium is given only a 39% chance of moving higher this August and the CRB Index just a 42% chance.
Long dated bonds aside from Swiss 10-years are on multi-year bullish streaks in August and Barclays suggests the odds of a yield advance this month are 50% or less for US, Euro, UK and Japanese 10 year bonds.
Similarly, Barclays sees only a 34% chance Australian 10-year bonds see a yield increase this month and a 35% chance for New Zealand 10-year bonds, while among shorter-term securities only three-month sterling is given a better than 50% chance of yield gains for the month.
In terms of yield curves, Barclays points out the US has the lowest odds of a steepening in the curve between its two-year and 10-year securities, this despite being on a three year steepening streak. In relative value terms, the group notes Japanese two-year securities tend to do better in August than similar securities in either the US or Europe.
