The Santa Rally — What’s It All About?
Quite astonishingly, we’ve landed in mid-December. Where has this year gone? With that in mind, we’re turning our attention to something festive in today’s trading preview — the Santa Rally! After that, we’ll give you a quick run-down on all things trading this week. Shall we get going?
What is the Santa Rally?
Seasoned traders will know that the stock market has this really weird tradition of picking up in the last few weeks of December and into the New Year. When this happens, it’s largely attributed to good ol’ St. Nick chucking his magical holiday dust over the markets and, therefore, appropriately dubbed a Santa Rally.
Amazingly, more than two-thirds of Decembers since the 1960s have led to positive gains for shareholders.
Obviously, we all know that Santa is real, but if you don’t happen to believe in his magical holiday dust, there are several other theories that try to explain why the Santa Rally happens. The popular among these state that it has something to do with either:
● The increase in holiday shopping and consumer spending, giving a nice boost to retail.
● The general merry optimism fuelled by the holiday spirit, perhaps loosening trader’s purse strings just a little.
● The fact that the slightly more scrupulous institutional investors tend to settle their books before going on off on their holidays, leaving the ever so slightly more impetuous retail investors to do their thang. Impetuously.
Will there be a Santa Rally this year?
Well, that entirely depends on whether you’ve been naughty or nice! Well, in actual fact, this year might be a little different to others and we might not see such a sustained uptick in the markets. Why? Well, you might have noticed that those 3 bullet points are all well and good in a normal year, but 2020 has been anything but normal.
Will the lockdowns take their toll and force a more sombre feeling in the markets this year? Or will a combination of the recent vaccine news and that chipper seasonal cheer break through and encourage a Santa Rally after all? Only time will tell.
For now, let’s all try and stay Ho-Ho-Hopeful!
What’s on the global agenda this week?
A super-busy week lies ahead! Here’s everything you can’t afford to miss:
Monday 14th December
No major events planned.
Tuesday 15th December
● GBP — Employment Change (Sep)
Wednesday 16th December
● GBP — Inflation Rate YoY (Nov)
● CAD — Inflation Rate YoY (Nov)
● USD — Retail Sales MoM (Nov) + FOMC Economic Projections
● NZD — GDP Growth Rate YoY (Q3)
Thursday 17th December
● AUD — Employment Change (Nov) + Unemployment Rate (Nov)
● GBP — Bank of England Interest Rate Decision
Friday 18th December
● JPY — Inflation Rate YoY (Nov) + BoJ Interest Rate Decision
That’s all we have time for in this week’s trading preview. Join us next week when we’ll be assessing the financial performance of some Christmas staples — don’t miss it!
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The Contentworks team