● The Spanish index is the only analyzed index with a lower performance in the last month of the year, compared to the previous 11 months
● The markets in Hong Kong and the UK record the highest returns at Christmas, averaging 3.1% and 1.93%, respectively
● Overall, the performance in December exceeds the average of other months by 1.06%, which corresponds to 23% of annual profits
Tuesday, December 9, 2024. Investors in the major stock markets around the world earn nearly a quarter of their annual profits in December. However, the Ibex 35 usually deviates from this trend and is one of the indices least likely to report higher gains at Christmas. In contrast, the markets in the UK and Hong Kong tend to exceed the profits of the rest of the year in December, according to findings from an analysis conducted by the investment and trading platform eToro.
The so-called Christmas rally – the tendency of markets to achieve better results in December – is well known among experienced investors, but eToro's data underlines how pronounced the trend is and, therefore, how important it is to maintain investments during the holiday season.
eToro has analyzed the monthly returns of 14 of the largest stock indices in the world, from the US S&P 500 to the German DAX 40, over the last 50 years. The analysis shows that the average return in December is 1.63%, significantly surpassing the average monthly return from January to November by 1.06%. Thanks to the Christmas rally, December usually accounts for 23% of the total profits of these stock markets throughout the year.
Average monthly performance of the 14 major global stock indices included in the eToro study
“Although past returns are never a guarantee of future results, December has historically been a standout month for global stock markets, in which the so-called Christmas rally has consistently paid off,” comments Sam North, an analyst at eToro.
“Our analysis reveals that December accounts for almost a quarter of annual returns on average, a statistic that underscores the importance of maintaining investments. Although the reasons behind this seasonal boost may vary – from optimism about the new year to increased stock market activity – it is clear that neglecting this period could be costly for retail investors,” continues North.
According to the data, based solely on the magnitude of returns, the best opportunities for investors in the Christmas rally in recent years have been in the Hang Seng index of Hong Kong, which since 1965 (the year records began) has risen an average of 3.1% in December. This is 2.15% higher than the average monthly return of this index during the rest of the year and represents 23% of the index's average annual stock market return.
Another titan of the holiday season is the British FTSE 100. Since its inception in 1984, December has outperformed other months by 1.93%, with an average return of 2.29% and 36% of its annual performance. The main Japanese index, the Nikkei 225, is not far behind, with gains exceeding 1.98% in December, surpassing monthly returns from January to November by 1.59%, and representing 32% of the annual return.
Among the 14 indices analyzed by eToro, the only Christmas Grinch that spoiled the party was the Spanish IBEX 35, with a December performance lower than the average performance from January to November by 0.14%. Meanwhile, the performance of the Australian ASX 200 (+1.36%) in December demonstrates that the Christmas rally is equally important in the sunny climates of the southern hemisphere.
"Hong Kong and the UK have recorded very good results in December over the past decades, while the Spanish IBEX 35 seems to be among the least fortunate. These regional peculiarities remind us that there is no one-size-fits-all approach to global markets, and that investors should be attentive to local dynamics to make the most of this time of year,” concludes North.
Performance in December of the stock markets included in the eToro analysis
Stock index Average return in December Average return in December compared to the rest of the year December return as % of annual return
Hang Seng (Hong Kong) 3.09% 2.15% 23%
FTSE 100 (UK) 2.29% 1.93% 36%
Nikkei 225 (Japan) 1.98% 1.59% 32%
TSX (Canada) 1.84% 1.34% 25%
ASX 200 (Australia) 1.78% 1.36% 29%
KOSPI (Korea) 1.75% 0.98% 17%
STOXX 600 (Europe) 1.71% 1.32% 29%
Nasdaq (USA) 1.53% 0.48% 12%
SIX (Switzerland) 1.42% 0.92% 20%
DAX 40 (Germany) 1.32% 0.71% 17%
S&P 500 (USA) 1.28% 0.63% 16%
FTSE MIB (Italy) 1.26% 1.05% 39%
CAC 40 (France) 1.19% 0.58% 15%
IBEX 35 (Spain) 0.42% -0.14% 7%
*Past returns are not indicative of future results.
About the data
Calculated from Refinitiv price data available until the end of 2023 for 15 of the largest stock indices in the world: S&P 500 (data since 1964), NASDAQ (1980), Stoxx 600 (1987), TSX (1950), FTSE 100 (1984), FTSE 250 (1986), DAX (1965), CAC 40 (1970), SMI (1998), FTSE MIB (1998), IBEX (1970), Hang Seng (1965), Nikkei 225 (1970), KOSPI (1975), ASX (1992). The average is a simple weighting of the 15.