Will this month be another March of changing trends?

The trend for the market in March is to rise for the first three weeks and then fall back in the last week.

Since 1990, the stockmarket has generally seen positive returns in March.

The FTSE All-Share index has had an average monthly return of 0.2% and seen positive returns in 54% of years since 1990. This ranks March seventh among the months of the year for market performance.

However, the record in recent years has not been so strong: since 2000 the average return in March has been 0.1% and (see chart) negative returns have been more common than positive ones for the index.

The trend for the market in March is to rise for the first three weeks and then fall back in the final week – the last week of March has historically been among the weakest for the market in the whole year. This weakness at the end of March partly explains why April has historically seen such high returns, as prices bounce back in that month.

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

March is the busiest month of the year for FTSE 100 companies paying dividends. And it’s also a busy month for company announcements.

March often marks a significant change in price trends. For example, 12 March 2003 saw the FTSE 100 index hit a low of 3287 after the dotcom crash. And this year, 3 March will mark the 10th anniversary of the FTSE 100 index closing at 3512 – its low point after the credit crunch. It will also mark the two-year anniversary of bitcoin surpassing the price of gold for the first time.

A graph showing the performance of the stock market in March from 1984 to 2018

 

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