Cause and Effect: What Happens to the Financial Markets Over Christmas?

santas-hat-1918798_640While the financial marketplace may seem like an Omni-potent and indefatigable entity, it is not immune to the impact of public and consumer holidays. One of example of this can be seen during Thanksgiving and the Black Friday weekend, as heavy spending during this popular consumer holiday is seen as a leading indicator of future prosperity and a buoyant stock market. This can therefore trigger a series of events that drive higher retail revenues and investor profits during the final financial quarter of the year.

While this is one example of how public holidays can impact on the financial market, however, there are others that are equally insightful. Have you ever wondered what happens to the markets during the festive season, for example, when even the most fervent traders and business-owners are at home tucking into their turkey?

What Happens to the Financial Markets at Christmas? 

If not, you may be surprised to note that the lucrative and globally accessible financial marketplace has always respected public holidays, with national stock exchanges closing in line with celebrations such as Christmas and Easter. This year was no exception, with the prestigious London Stock Exchange Plc. closing for several days over Christmas and New Year.  In fact, it closed down after 1.15 PM GMT on Friday 23rd December, before reopening as normal on Tuesday, 27th December.

It will also close again at 1.15 PM GMT on Friday 30th December, before normal service is resumed  on Monday, 2nd January.

The question that remains beyond this is whether or not such interruptions and trading breaks have a negative impact on the performance of specific markets and investments? While it is fair to say that much will depend on the nature of each individual marketplace and the impact of seasonal trends (particularly for assets such as commodities), it is possible to isolate general indicators for large-scale entities such as the stock and the foreign exchange. There has also been a great deal of research into this phenomenon, as traders look to seek out any potential competitive advantages during the festive season.

Overall, it is estimated that the good will and positive sentiment of the festive period usually translates into marginally higher returns for investors, particular for those who deal primarily in stocks. One study in particular explored the historical behaviour of the S&P 500 Index during a ten-day period before and after Christmas, charting its performance between 1950 and 2015. The results highlighted abnormal strength from the trading day just before Christmas (the 23rd of December), with this trend continuing throughout the week following the festive break.

What Can Traders Take From These Findings?

Clearly, there is competitive advantage to be gained by traders during the Christmas period, particularly those who prioritise stocks and shares. Successfully leveraging this will be the single biggest challenge for investors, especially if you like to take a break during the festivities and remove yourself from the hectic trading environment. In this instance, it is crucial that you utilise real-time news feeds and mobile trading apps such as the popular Metatrader 4, as these will enable you to execute instant transactions regardless of where you are or what you are doing.

Make no mistake; this type of technology is crucial if you are to capitalise on improved market growth and sentiment during the festive season, while also enjoying time friends, family, and loved ones.

Enjoy Plunged in Debt?

Pid

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Cause and Effect: What Happens to the Financial Markets Over Christmas?

santas-hat-1918798_640While the financial marketplace may seem like an Omni-potent and indefatigable entity, it is not immune to the impact of public and consumer holidays. One of example of this can be seen during Thanksgiving and the Black Friday weekend, as heavy spending during this popular consumer holiday is seen as a leading indicator of future prosperity and a buoyant stock market. This can therefore trigger a series of events that drive higher retail revenues and investor profits during the final financial quarter of the year.

While this is one example of how public holidays can impact on the financial market, however, there are others that are equally insightful. Have you ever wondered what happens to the markets during the festive season, for example, when even the most fervent traders and business-owners are at home tucking into their turkey?

What Happens to the Financial Markets at Christmas? 

If not, you may be surprised to note that the lucrative and globally accessible financial marketplace has always respected public holidays, with national stock exchanges closing in line with celebrations such as Christmas and Easter. This year was no exception, with the prestigious London Stock Exchange Plc. closing for several days over Christmas and New Year.  In fact, it closed down after 1.15 PM GMT on Friday 23rd December, before reopening as normal on Tuesday, 27th December.

It will also close again at 1.15 PM GMT on Friday 30th December, before normal service is resumed  on Monday, 2nd January.

The question that remains beyond this is whether or not such interruptions and trading breaks have a negative impact on the performance of specific markets and investments? While it is fair to say that much will depend on the nature of each individual marketplace and the impact of seasonal trends (particularly for assets such as commodities), it is possible to isolate general indicators for large-scale entities such as the stock and the foreign exchange. There has also been a great deal of research into this phenomenon, as traders look to seek out any potential competitive advantages during the festive season.

Overall, it is estimated that the good will and positive sentiment of the festive period usually translates into marginally higher returns for investors, particular for those who deal primarily in stocks. One study in particular explored the historical behaviour of the S&P 500 Index during a ten-day period before and after Christmas, charting its performance between 1950 and 2015. The results highlighted abnormal strength from the trading day just before Christmas (the 23rd of December), with this trend continuing throughout the week following the festive break.

What Can Traders Take From These Findings?

Clearly, there is competitive advantage to be gained by traders during the Christmas period, particularly those who prioritise stocks and shares. Successfully leveraging this will be the single biggest challenge for investors, especially if you like to take a break during the festivities and remove yourself from the hectic trading environment. In this instance, it is crucial that you utilise real-time news feeds and mobile trading apps such as the popular Metatrader 4, as these will enable you to execute instant transactions regardless of where you are or what you are doing.

Make no mistake; this type of technology is crucial if you are to capitalise on improved market growth and sentiment during the festive season, while also enjoying time friends, family, and loved ones.

Enjoy Plunged in Debt?

Pid

Subscribe to get our latest content by email.

Powered by ConvertKit

Speak Your Mind

*