FYI | Oct 05 2010
By Chris Shaw
Barclays Capital's technical team has looked at historical sector performances for the fourth quarter, its research showing equities to be the clear standout winner. All the indices covered by the group have historically posted positive median and average returns, though the likelihood of advance ranges from 57% for Japan's Topix to 77% for the Switzerland's SMI.
This quarter Barclays suggests that along with the TOPIX, the Dow Jones, the S&P500 and the Toronto stock index also offer around a 77% chance of advancing, while Japan's Nikkei and Australia's All Ordinaries are both given around 63% chances of gaining in the period. Only Germany's DAX is given less of a chance of advancing at 62%.
For currencies, the technical team at Barclays notes the fourth quarter tends to be the most bullish of the year for the euro against the Japanese yen, while the US dollar historically has tended to gain against the commodity currencies but lose ground to other G4 currencies.
Odds for an advance this year reflect this, Barclays seeing the euro/yen as having a 70% chance of gaining this quarter, while next best is the euro against the British pound at 65%. Least likely to gain according to Barclays is the US dollar against the Swiss franc at just a 39% chance, while the group gives only a 44% chance of the Australian dollar gaining against its New Zealand counterpart.
Natural gas has historically been the best performing commodity in the fourth quarter and Barclays sees this trend continuing, giving gas a 58% chance of gaining this time around. Gold is given a similar percentage chance of ending the quarter higher, which is in contrast to the 39% chance Barclays gives silver of gaining in the period.
Among the base metals Barclays gives aluminium a 57% chance of end the quarter higher, while copper is seen as an even money bet. Oil is given just a 37% chance of gaining in what tends to be its worst quarter of the year, while overall Barclays suggests the likelihood of the CRB index gaining is about 57%.
In the fixed interest market a strong December quarter is typically the case as most yields tend to remain lower with the US the exception in posting historical gains across the yield curve. Best quarter of the year performance tends to come from Swedish and Japanese 10-year bonds and 3-month LIBOR securities.
Looking at a broad range of fixed interest securities, Barclays gives only US 5-year and 2-year bonds and 3-month Sterling securities a better than 50% chance of posting a yield increase this time around. Least likely is Swedish 10-year bonds, where Barclays sees the likelihood of a yield increase is only around 25%.
