Regardless of the S&P 500's performance during each of the last thirteen FIFA World Cup tournaments, the index ended up rallying by at least 30% either immediately after the tournament, or within three months from the final match.
Negative performance during the World Cup
- 9 of the last 13 World Cup tournaments elapsed during a period of falling stocks, with an average decline of 6% from the first to final match.
- 2 World Cup tournaments progressed during rallying markets, while 2 occurred with little signigicant change in the market.
Typical October rallies
- In 7 of the last 13 World Cups (1962, 1966, 1974, 1986, 1990, 1998 & 2002), stocks started rallying in October to gain an average of 63% over an average period of 24 months.
- The 1978 tournament was followed by rallies starting in November.
Interruption is necessary
- Global indices have never rallied during a World Cup tournament and gone on to gain thereafter.
- In 5 of the 9 tournaments coinciding with failing equities, the sell-off continued until reversals emerged in October or November.
Whether equities end up falling from today's opening match to the final championship game, post-World Cup sell-offs have usually bottomed in October. This may coincide with the end of the Fed's tapering.
But, with the Yellen Fed having succeeded in separating the end of tapering from the start of rate hikes, markets are likely to shift the focus into the start of rate hikes, which are unlikely to occur before end of Q2 2015.
After all, the S&P 500 has rallied for three straight weeks. The next four weeks may well be just the opportunity for letting off steam in Brazil.
From time to time, GAIN Capital UK Limited’s (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.
As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.