As we enter February, there is bad news on the season front; This is the second-worst month for the S&P 500 in 100 years and the third-worst month since the millennium. This is the worst month for Nasdaq since 2000. But there is strong evidence behind the adage ‘As January, so will year’, and with a decent increase last month, it bodes well for 2024 as a whole.
Seasonal transactions for February:
1) Return in oil
Oil has certainly followed its weak seasonal pattern in November and December before showing a modest increase in January. There is a strong seasonal oil draw starting from the end of February and continuing through May. Yesterday US figures showed demand was stronger than recommended weekly figures as OPEC continues to increase its stockpiles. There is a possibility of buying the dip in the first three weeks of the year as growth has continued so far.
2) Some positives for the Australian dollar
The RBA is starting to look like an outlier on monetary policy but the AUD has been pulled lower by weak sentiment in China and commodities. Seasonally, February is a good month for AUD in several respects, and a nice seasonal strength period begins in the AUD/JPY parity until April.
3) Is China rising?
It’s been a gloomy period for Chinese stocks, but the lunar new year holiday period is traditionally good for the Shanghai Composite. This was the second-best month for the index, with an average gain of 2.19% since 2000. Last year, even in the midst of a brutal four-month period, the index rose in February.
4) See a doctor
With China being strong, it is no surprise that it was also the strongest month of the year in terms of copper. It has been won in February in 12 of the past 16 years.
5) Worst month for cable
February is the worst month on the calendar for the pound, but only marginally worse than May and August. Despite the decline over the last seven Februarys, including a 300 pip decline last year.
This is a leap year, and regardless, the average change in the S&P 500 on February 29 is -0.06%.