November market: The UK Stock Market Almanac

The latest edition of Stephen Eckett’s fascinating reference book may have you scratching your head in search of a rational explanation for what is presented, but one thing is for sure, you’ll return to it again and again as

Market performance this month

Since 1990 the FTSE All-Share Index has seen an average return of 0.6% in the month of November; with positive returns in 15 of the last 28 years. This ranks November in the middle of the 12 months for equity performance. However, in recent years the market has been noticeably weak in November ­in the last 12 years the Index has only seen positive returns in the month in four years.

Six month effect

The significant feature of November is that it marks the start of the strong six-month period of the year (November to April ­ an aspect of the Sell in May effect).

In other words, investors should be increasing exposure to the market this month (if they haven’t already done so in October).

A feature of November in recent years has been its low volatility, since year 2000 the volatility of shares in November has been the lowest of any month in the year.

The average November

In an average November, the market rises in the first three days, but those gains are then given up in the following few days. In the middle of the month prices increase and then fall back again, before finally rising strongly in the last seven days of the month.

Sectors

In the last ten years the FTSE 350 sectors that have performed strongly in November have been: Food Producers, Aerospace & Defense, and Media.

While the weak sectors have been: Oil Equipment, Services & Distribution, Real Estate Investment Trusts, and Industrial Transportation.

Shares

At the company level, FTSE 350 shares that have tended to be strong in November over the past ten years have been: CRH [CRH], Shire [SHP], Britvic [BVIC], Babcock International Group [BAB], and Compass Group [CPG].

FTSE 350 shares that been weak are: Galliford Try [GFRD], Royal Bank of Scotland Group [RBS], Ashmore Group [ASHM], Hochschild Mining [HOC], and Petrofac Ltd [PFC].

Elsewhere, November has tended to be a strong month for gold and weak for the pound against the dollar.

Diary

This is a busy month for interim results: 64 companies from the FTSE 350 make their announcements in November.

Dates to watch out for this month are – US Nonfarm payroll report, two-day FOMC meeting starts, MPC interest rate announcement and inflation report, MSCI semi-annual index review.

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