The UK stock market offers retail investors the most generous Santa rally, while the festive trend is the weakest in the US, according to analysis from investment and trading platform IG.
IG analysed 25 years of market data for five leading global stock markets across the US, Germany, Japan, Hong Kong and the UK. The data showed that the FTSE 100 has on average returned 1.84% in the month of December, far outperforming the 0.94% gain from the S&P 500.
The FTSE 100’s December outperformance has been so significant over the last 25 years that this month has accounted for a staggering 92% of annual returns. Meanwhile the S&P 500’s December performance accounts for around 15% of the annual average.
The US market also lagged behind European and Asian indices for average December returns, including Germany’s DAX (1.81%), Japan’s Nikkei (1.5%) and Hong Kong’s Hang Seng (1.4%). The DAX has returned 6.98% per year on average over the last 25 years, meaning the German market’s December performance accounts for a chunky 26% of total annual gains.
The average Santa Rally return for Hong Kong’s Hang Seng is 1.4%, accounting for 31% of average annualised returns, while Japan’s Nikkei sees an average December return of 1.5%, representing 28% of total average annualised return.
| Index | Average December performance (without dividends) | Average annual performance (without dividends) | Santa rally as proportion of annual performance |
| FTSE 100 | 1.84% | 2.01.% | 92% |
| DAX | 1.81% | 6.98% | 26% |
| Nikkei | 1.5% | 5.28% | 28% |
| Hang Seng | 1.4% | 4.53% | 31% |
| S&P 500 | 0.94% | 6.35% | 15% |
*Data taken from Bloomberg covering previous 25 calendar years
Chris Beauchamp, Chief Market Analyst at IG said: “While the US market has delivered outsized returns for many years, our data shows that the holiday period is traditionally when the FTSE tends to shine with this month delivering a staggering 92% of annual price gains, albeit with dividends not included. That may offer some reassurance to UK investors still weighing the impact of last month’s Budget, particularly the changes to dividend taxes.
“With the FTSE 100 on track to outperform the S&P 500 for the first time since 2016 – and having already reached record highs this year – we may well see a stronger Christmas comeback from US stocks, but trying to call these moves with any certainty is impossible.
“For investors, the important lesson is not to get swept up in short-term patterns. But for those considering a first step into the market or adding to existing positions, this time of year has often proved a favourable moment to act.”
