
Santa Claus rally?
The last month of the year is traditionally marked by above-average returns compared to the rest of the year. This December could be an exception.
Investors are tuned to a very positive note before the beginning of December, according to various corridor informations. It is due to several factors. Probably the strongest one is historical development. New York Stock Exchange data since 1926 shows that December is a long-term above-average yield month compared to the remaining ones.
Against that historical experience is primarily the fact that this year optimism came to the stock market a little earlier than usual. This leads analysts of RBC Capital, for example, to believe that Wall Street could peak before the end of the year. “The euphoria among institutional investors is so high that market correction could occur sooner than normal,” Lori Calvasina of RBC Capital told CNBC.com.
The FOMO (fear of missing out) effect may soon spread on the markets. This means that investors are increasingly afraid that they will close their positions in the current situation too late and miss the best moment to sell their shares. So they prefer to sell it. So they don’t miss it. So they can tear off a sales avalanche. This is one of the reasons why the financial markets are so sensitive to any information about the state of the global economy, the US-China negotiations or the movement of central bank interest rates.