Dec 20 – Jan 7. | Festive Edition: How to Invest During the Holiday Season?

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We are entering the festive period, where the markets usually experience a wave of optimism! This year, however, things are a little different. We’re dealing with supply chain problems, spectacular inflation, and, of course, the Covid-19 variant which continues to spread.

For the last BUX Breakdown of 2021, we’ll provide a snapshot of events all the way through to January 7th. That way, you can make the best decisions for your portfolio in the context of the holidays. We’ll be back in mid-January for the rest!

Your Christmas week: keep your eye on Nike and e-commerce

Despite a recent drop in online shopping compared to 2020, e-commerce platforms are likely to enjoy a boom around the Christmas holidays. Sales from Amazon, for example, could increase by 25% during this time.

On top of that, Nike will announce its figures for the second fiscal quarter of 2022 on Monday, 20th December. Nike could report revenue of $11.23 billion, a small drop of 0.1% year-over-year. However, the stock has returned 245% over the past five years, which could make it an attractive investment for the long-term. Many analysts have recently revised their forecasts higher for Nike’s 2022 figures.

Economic and earnings data:

  • Monday, December 20th – Quarterly figures from Nike, Micron.
  • Tuesday, December 21th – Consumer confidence index in the Netherlands and in the eurozone (December). Quarterly figures from General Mills, Blackberry, Neogen.
  • Wednesday, December 22th – GDP growth in the United States (Q3). Quarterly figures from Hornbach, Cintas.
  • Thursday December 23rd – GDP growth in Spain (Q3). Weekly unemployment figures for the United States.
  • Friday, December 24th – GDP growth in the Netherlands (Q3).

Market hours during Christmas week

  • American markets will be closed this Friday, December 24th.
  • Most European stock exchanges will also be closed on Friday, with the exception of the Paris, Amsterdam, and Brussels stock exchanges, which will close at 2.05 pm.

Your New Year’s week: Santa Claus rally?

The stock markets often rise in the weeks running up to Christmas and New Year. It’s sometimes referred to as a Santa Claus rally. Investors are usually feeling more optimistic over the festive period. The markets are also boosted by end-of-year tax benefits as well as people investing their bonuses.

There is another theory, too. Large institutional investors usually go on holiday at this time of year, leaving the market to retail investors, who tend to be more optimistic!

Whatever the reason, since the 1960s, December has been a positive month for the stock market two-thirds of the time. To learn more about this phenomenon, read this article.

If you think it will happen again, you can take a look at the ETF that tracks the broader S&P 500 index: S&P 500 Index ETF (Vanguard). Since 1945, the S&P 500 has gained around 1.5% every December.

Economic data this week:

  • Monday December 27th – Unemployment figures in France (November).
  • Tuesday December 28th – Consumer Confidence Index in Ireland (December).
  • Thursday, December 29th – Inflation rate in Spain (December). Weekly unemployment figures for the United States.

Changing schedules during New Year’s week

  • Most European stock exchanges will be closed on New Year’s Eve (Friday, December 31st), with the exception of the Paris, Amsterdam, and Brussels stock exchanges, which will close at 2.05 pm.

Your ‘hangover’ week: will we start 2022 with a bang?

After the Santa Claus rally, it’s time to talk about the “January Effect,” which is another seasonal increase in stock prices. This time it’s associated with a taxation strategy. In December, investors often sell their poorly-performing stocks, which pushes down their value. In the new year, they quickly buy them back at discounted rates. Please note: this is not an exact science.

Some companies are eager to release their quarterly figures and some will reveal their earnings in the first week of January. For example, Simply Good Foods will report on Tuesday, January 4th. Earnings-per-share growth is expected to hover around 11.5%. However, the company has beaten estimates by almost 30% on average over the last two quarters.

Resolutions for 2022?

The first few days of January can be the perfect time to readjust your investment goals. So, to end this festive edition of the BUX Breakdown here are a few resolutions that could improve your portfolio in 2022:

Economic data to watch

  • Monday January 3rd – Manufacturing PMI index in the Netherlands, Spain, France, and the eurozone (December). Quarterly figures from Pure Cycle Corp.
  • Tuesday January 4th – Unemployment rate in Germany (November), inflation rate in France (December). Quarterly figures from Simply Good Foods.
  • Wednesday January 5th – Consumer confidence index in France (December). unemployment rate in Spain, services PMI index in Italy, Spain, Germany, and the United States. Quarterly figures from Bed Bath & Beyond.
  • Thursday January 6th – Unemployment rate in Ireland (December). Inflation rate in Germany (December). Weekly unemployment figures and trade balance (November) for the United States.
  • Friday January 7th – Trade balance in France, Germany, Austria (November). Unemployment rate, inflation rate, and consumer confidence in the euro area (December).

We’ll be back next year with another edition of the BUX Breakdown. Until then, have a great week in the markets, and a happy New Year!

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This BUX Breakdown was written by Clémentine Pougnet.

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All views, opinions, and analyses in this article should not be read as personal investment advice and individual investors should make their own decisions or seek independent advice. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication.

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