Be of Good Cheer

How does the seasons and holidays impact markets? Has this year been any different so far?


Markets seem to be getting into the Christmas spirit early this year. Our domestic market has been holding up very well and was pushing nicely ahead at the end of November. Even the pound has been making modest progress. And this against a background of rising government debt, double digit inflation, a worrying increase in industrial action and the expectation of a lengthy recession. Moreover, there is no sign of any reduction in the adverse geo-political issues which continue to lurk in the background.

Perhaps part of the reason for investors taking a more relaxed view towards likely outcomes is the greater stability that appears to have been established at the top of the Conservative administration. While it would be foolish to underestimate the problems faced by the new Prime Minister and Chancellor of the Exchequer, markets are clearly taking the view that there are as safer pair of hands in Downing Street as you are likely to find at present.

Otherwise, there has been little of note to get investors either excited or worried. Black Friday, an American import that has assumed increasing importance in the calendar of retailers’ expectations, seems to have enjoyed more robust sales than feared. And we now have Cyber Monday to keep those virtual cash registers ringing. This has encouraged analysts to assume Christmas may not be too much of a washout. Consumers are not giving in yet, despite the pressures being felt from the rising cost of living.

With little in prospect on the economic front and company news thin on the ground, we can but hope that the Santa rally will remain in place as we approach the end of the year. The prospect of strikes in the run up to Christmas might impinge upon the festive spirit, but there is always the Football World Cup to take our mind off of markets. Unfortunately, that could well turn out to be a two edged sword. Still, it is the season of good cheer, so why worry about what could still go wrong. Time to compile those present lists and order the turkey, I feel.

Brian Tora

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