The stock market in March: a middling month

Since 1990 the market has returned 0.2 per cent in March on average, with returns positive in 54 per cent of years.

This ranks March seventh among months for market performance. However, negative returns have been seen in March with increasing frequency in recent years.

The general trend for the market in March is for it to rise for the first three weeks and fall back in the final week. The last week of March has historically been one of the weakest weeks of the year for the market.

Small-cap stocks tend to outperform large-cap stocks at the beginning of the year, and March marks the final month of a three month period when the FTSE 250 index strongly outperforms the FTSE 100 index. Since 1986, on average the FTSE 250 has outperformed the FTSE 100 by 0.8 percentage points in March.

Sectors that tend to be strong in March include chemicals, industrial engineering, industrial transportation, oil equipment, services and distribution, and support services. Indeed, the chemicals, oil equipment, services and distribution sectors have seen positive returns every March for the past 11 years. The banking sector has the worst record, with positive returns seen in just three of those years.

March is the busiest month of the year for FTSE 100 firms paying dividends. It’s also a hectic month for company announcements: the busiest in the year for FTSE 250 companies, with 71 companies announcing preliminary results in the month (along with 24 FTSE 100 companies).

Elsewhere, March has often been a weak month for gold and a strong one for oil. Finally, it’s Good Friday at the end of the month. Stock market prices tend to be strong on the days preceding and following a holiday, and this effect is strongest around the Easter holiday.  

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