Record start for FTSE 100 could set tone for rest of the year

January 4, 2017 | 5years | Investment News

The new record high reached by the FTSE 100 this morning could set a positive tone for markets for the rest of the year.

The UK’s blue chip index hit 7,205 in early trading, which could signal good news for investors thanks to a phenomenon called the ‘January effect’.

The ‘January effect’ describes the tendency for positive markets in the first month of the calendar year to lead to positive markets in the subsequent 11 months.

Analysis from Fidelity International shows that since the inception of the FTSE 100 in 1984 the index has risen in the first month of the year in 19 out of 32 years.

In all but four of these, the UK benchmark has gone on to record a further gain between February and December. That’s a 79% success rate.

Tom Stevenson, investment director for personal investing at Fidelity International, said: “There is an old adage that states ‘as goes January, so goes the year’. While the ‘January effect’ may not have come off last year, it is hard to argue against the statistics which show that a positive January has led to further rises four out of five times during the past 32 years.

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