It’s well known that stock markets underperform in the summer, with the old dogma of ‘sell in May and away’, but new research from eToro suggests there are still some opportunities and bright spots.
Based on data from the last 45 years, the top global index performers are the Nasdaq and HSENG. Things go wrong in the summer paradise of Italy and France. The market least affected by the May effect is one where there is no summer when the rest of us are; Australia.
– The high summer months are usually some of the weakest months of the year for global stock markets, led by France and Italy – as investors are likely to be more interested in enjoying the sun and the beach than in following the market. However, history suggests that some markets and sectors do better than others, with equity markets leading the way in the US and Hong Kong, says eToro’s global market analyst Ben Ledler.
He also says it’s worth noting that almost all major indicators rise in the summer, despite what most people think. The numbers eToro has extracted and analyzed show that the defensive sector such as health tends to remain strong during the summer, along with the completely non-defensive technology sector.
With summer markets and consequent lower trading volumes, investors typically seek out relatively safe havens, such as healthcare, consumer goods, and technology, rather than riskier havens such as raw materials. This summer may soon be the same, with risks of higher interest rates and slower growth. But every year is different, and last July was the best month for the S&P 500 all year. And it’s worth remembering – history often rhymes, but it rarely repeats itself.
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