The concept of a “summer break” in equity markets refers to a seasonal pattern rather than an official halt in trading. Stock markets observe public holidays only.
Sesaonal trends and market behavior
Lower trading volumes: During the summer months, particularly from late June to early September, trading volumes typically decrease. Many traders, investors and institutional players take vacations, resulting in less participation in the markets.
Reduced volatility: With fewer markets participants, the markets may experience reduced volatility. This can lead to narrower trading ranges and fewer large price swings. However, this isn’t always the case, as unexpected news or events can still cause significant market movements.
Historical performance: Historically, certain months like August have been known to exhibit lower returns compared to other times of the year. This is part of the reason behind the adage “sell in May and go away”, suggesting that investors might avoid the market until the summer is over.
Notable events influencing the equity markets
Earnings season: Despite the lower activity, summer is also a time when many companies report their quarterly earnings. These reports can still lead to significant movements in individual stocks or sectors.
Economic data releases: Key economic indicators and data releases continue through the summer, These can impact market sentiment and lead to price changes.
Geoplitical events: Unforeseen geopolitical events can disrupt the market regardless of the season. Given the lower liquidity, the impact of such events can sometimes be more pronounced.
Baltrag AG is always monitoring the equity markets and their influence on your portfolio, so that you can relax and enjoy our summer vacation while your assets are in safe hands.
