The stock market in February: strong month for shares, gold and silver

February share prices

Since 1970 the average monthly return from the FTSE All Share index in February has been 1.6 per cent, with the month seeing positive returns in 64 per cent of years. But a glance at the chart below shows how strong the market has been in February in recent years. Since 2009 the market has been up every February, and since 1994 it has seen significant negative returns in only three years.

There’s no obvious reason for this consistent strength, although one possible explanation is that shares have been weak in January in recent years and tend to bounce back February.

In an average February shares tend to rise strongly on the first trading day and then trade flat for a couple of weeks, before gaining strongly in the middle of the month and finally drifting off slightly at the end of the month.

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February is one of the best months, along with January, for mid-cap stocks relative to large caps. Since 2000, on average the FTSE 250 index has outperformed the FTSE 100 index in the month by 1.6 percentage points, during which time the large-cap index has outperformed midcaps in February in only four years.

On the international front, February is one of four months in the year when the FTSE 100 index has historically outperformed the S&P 500 index. Since 1999 the UK index has underperformed the US index in February in only four years, although the outperformance is somewhat attenuated once currency is taken into account, as the pound is historically weak relative to the dollar in February.

Aside from shares, historically, this has also been a strong month for gold and silver. 

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