‘Sell in May and go away’, is one of the most famous of stock market adages on Wall Street with the underlying message being, take your profits at the start of the warmer months and exit the market until the northern summer ends in early September on Labor Day (September 6, this year).
So what will happen this month? A year ago, the adage was ignored as markets were in a gathering rebound thanks to stimulus packages and support from governments and central bank.
There’s nothing like the smell of free money to get investors business people and others all confident. So instead of going away, investors stayed and played and when the summer ended, played even harder and ride the biggest rebound Wall Street had seen
But though April was a very strong month generally for markets – especially commodities like copper, iron ore and oil and gas (but no so for gold)- the final day of trading, April 30 was a down day globally.
On Friday the S&P 500 fell 0.7% to 4,181.17, while the Dow shed 185.51 points to close at 33,874.85. The Nasdaq Composite dropped 0.9% to 13,962.68.
Despite Friday’s weakness, the S&P 500 notched its third straight month of gains in April, adding more than 5% as investors again bet on a big economic and profit recovery from the pandemic – and on the efficacy of Covid vaccines.
The S&P 500 is now up more than 11% for the year and closed at a new all-time high on Thursday on the heels of blowout earnings results from Apple and Facebook.
For April, the Dow rose 2.7% this month, while the Nasdaq was up 5.4% in April.
More strong US economic data was released on Friday but failed to have a positive impact on trading.
The Fed’s preferred expenditure, savings and prices data showed March spending jumped a better-than-expected 4.2%, while personal incomes surged by a massive 21.1% thanks to the extra stimulus and core prices edged up to be up 1.8% annual from a 1.4% rate in February.
Eurozone shares fell 0.5% over the last week, Japanese shares fell 0.7% and Chinese shares lost 0.2%. For April as a whole, global shares gained 3.9%.
While Australian shares gained a solid 3.5% in April, they fell 0.5% over the past week (and 0.8% on Friday) as the local market continues to work off technically overbought conditions after its early April surge.
Wall Street will see the ASX 200 starting May down a touch at the opening if the small 7-point fall in the futures market on Friday is again gain.
There’s a whole of local data for the investors to swallow this week on house prices, the Reserve Bank’s May meeting tomorrow, new economic forecasts from the central bank on Friday and data on building approvals and housing finance.
