In fact, only December is a stronger month in terms of market performance.
According to the UK Stock Market Almanac 2016, on average, the UK market rises 1.8% in April. Furthermore, there’s a 78% chance of a positive return by the time the month comes to an end. This is based on the performance of the FTSE 100 since 1984.
Although past performance is not a reliable indicator of future results, this might serve as positive news for investors, currently feeling a tad apprehensive about the markets as uncertainly continues to swirl.
No April Fools here
The first trading day of the month – which will be April Fool’s Day this year – is a serious trading day. It is the second strongest first day of the month and the fifth strongest market day in the entire year, again, according to the Almanac.
Aided by the opening day performance, the first week of April tends to see the markets climb before things settle out over the next two weeks. It usually culminates in another strong week as the month draws to a close.
Such consistency means that it was only five years ago that April was the strongest month. Indeed, back in 1971, the month of April finished on a positive and would do so for the next 15 consecutive years – a record to this day.
Past performance is not a reliable indicator of future results
Source: The UK Stock Market Almanac 2016
A good month for oil?
Another slither of optimistic news is that, traditionally, April is a good month for oil prices. The commodities sector has staged something of a comeback over the last few weeks but it has plateaued a bit recently. With another Opec gathering in the pipeline on 17th April 2016 – where a uniformed cap on production will be discussed – April could once again prove to be strong for oil prices.
The suggestions for April’s positive performance vary, from investors reducing their exposure to equities because it is the last month in the strong part of the six month cycle (November to April), to the possibility of people organising their portfolios before holiday season starts – when trading naturally dips.
Another suggestion, particularly for the strong start, is that people are investing last minute before the tax year ends on the 5th April, and therefore when their annual £15,240 is timed out and started again in the new tax year.
Given the current market volatility, we will be keeping a keen eye on the performance of the markets during April to see if such past performance happens again.
There is still time to open a TD Direct Investing Stocks and Shares ISA and invest in it. Alternatively, if you’re keen to ensure you don’t miss out on your ISA allowance, you can put cash into your Stocks and Shares ISA and invest later.
Our ISA is not designed to hold cash for the long term. When you’re ready, we have a number of free tools and ideas to help you make confident investment decisions.
Please note the tax treatment of these products depends on the individual circumstances of each customer and may be subject to change in future.
The post Is April the perfect time to invest in the market? appeared first on News and Views.