##{"id":58588,"date":"2011-08-02T11:22:28","date_gmt":"2011-08-02T01:22:28","guid":{"rendered":"http:\/\/www.fnarena.com\/index.php\/2011\/08\/02\/base-metals-usually-struggle-in-august\/"},"modified":"2011-08-02T11:22:28","modified_gmt":"2011-08-02T01:22:28","slug":"base-metals-usually-struggle-in-august","status":"publish","type":"post","link":"https:\/\/staging.fnarena.com\/index.php\/2011\/08\/02\/base-metals-usually-struggle-in-august\/","title":{"rendered":"Base Metals Usually Struggle In August"},"content":{"rendered":"

\n\t– August generally positive for equities, energy
\n\t– Base metals tend to struggle this month
\n\t– US dollar outlook mixed, Aussie dollar likely to struggle against Kiwi dollar
\n\t– Bonds tend to perform bullishly in August<\/strong><\/p>\n

\n\tBy Chris Shaw<\/p>\n

\n\tAugust has historically offered a generally positive skew for equity markets according to the review of seasonal trends undertaken by Barclays Capital, the month generally delivering outperformance<\/span> of US indices relative to European counterparts.<\/p>\n

\n\tHistorical trends suggest the JSE<\/span> All Share index is the most bullish performer in August, while the CAC40<\/span> is the bearish standout for the month. Barclays gives the JSE<\/span> index a 71% chance of ending August higher, while Australia's All Ords<\/span> is close behind at a 69% chance. <\/p>\n

\n\tThe US indices are given 55-58% chances of posting gains this month, while at the other end of the scale the CAC40<\/span> has been given a 41% chance of gains in August. Japan's Nikkei and Hong Kong's Hang Seng<\/span> have both been given a 49% chance of ending the month higher.<\/p>\n

\n\tAmong the commodities, energy is usually the strongest performer in August, with natural gas tending to lead the way. Odds of an advance reflect this, Barclays seeing WTI<\/span> spot and natural gas spot prices as offering 58% and 56% chances respectively of gains this month.<\/p>\n

\n\tThe outlook is more mixed for precious metals as while Barclays gives gold a 55% change of ending August higher, silver scores only a 49% chance. The base metals outlook is less constructive, as Barclays gives copper a 48% chance of gaining this month and aluminium<\/span> just a 36% chance.<\/p>\n

\n\tIn the currency markets, Barclays notes August tends to be the worst month for the Euro against the Japanese yen and the Australian dollar against its New Zealand counterpart. The US dollar generally outperforms in August but Barclays sees somewhat mixed outcomes this time around. The group ascribes better than 50% chances of gains for the greenback against the British pound and the Aussie and Kiwi dollars but below 50% chances against the Canadian dollar and yen.<\/p>\n

\n\tAugust is typically a bullish month for bonds according to Barclays, with Canadian, Japanese and Swiss 10-year bonds among the longer-dated securities having their best month of the year as measured by median returns. <\/p>\n

\n\tThis August, Barclays gives US 10-year bonds a 51% chance of delivering a yield increase, the only such security rated a better than even money chance of such an outcome this month. At the shorter end of the curve, Barclays suggests 3-month short sterling historically has the highest average yield change in August. This time around the group gives this security a 55% chance of a yield increase, bettered only by 3-month Libor<\/span> at 58%.<\/p>\n

\n\tWith respect to yield curves Barclays suggests August tends to deliver only a modest amount of steepening<\/span> this month, while the US curve has a strong tendency to flatten. In relative value terms Barclays suggests the tendency to tighten is very strong in Japan vs EU and US 2-year bonds, while EU vs US 2-years tend to tighten.<\/p>\n

\n\t <\/p>\n

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