‘Sell in May' adage breaks down as Trump-era markets reward risk, but not for FTSE 100

• S&P 500 gains during May-October average 9.5% in Trump years compared to 1.3% historically, driven by domestic-focused technology stocks benefiting from deregulation
• FTSE 100 generates over 80% of revenues overseas, making it vulnerable to Trump-era trade tensions while US markets benefit from domestic demand
• Options markets show aggressive positioning with oil bets pointing to potential $200 per barrel prices by August, suggesting underlying volatility despite surface-level complacency

Market Summary: "Sell in May" Strategy Diverges Between US and UK Markets

Key Findings

The traditional "sell in May and go away" market strategy shows stark divergence between US and UK markets during Trump presidencies. Analysis from IG reveals the S&P 500 has delivered average gains of 9.5% between May and October during Trump's presidency, compared to just 1.3% in non-Trump years over the past two decades.

The FTSE 100, however, continues following traditional seasonal patterns with pronounced summer weakness during Trump years.

Market Composition Drives Performance Gap

The performance divergence stems from structural differences. The S&P 500 is dominated by domestic-focused technology companies benefiting from deregulation and strong US internal demand. Meanwhile, FTSE 100 constituents generate over 80% of revenues overseas, making the index vulnerable to global crosscurrents.

According to IG senior analyst Angeline Ong, "the FTSE tends to get caught in the crossfire while the S&P 500 keeps surfing that domestic wave."

Current Market Dynamics

Markets have recently "swapped fear for complacency," Ong noted, suggesting this environment gives Trump "free rein to do whatever he wants." However, underlying risks remain evident.

Options market positioning indicates aggressive oil bidding, with bets pointing to potential prices of $200 per barrel by August. Metals are also attracting attention due to supply constraints from demand linked to conflict that began in February.

Investment Implications

While seasonal patterns appear less relevant for US markets, sensitivity to geopolitical risk remains high. The divergence between US and UK markets suggests investors should consider regional composition and revenue exposure when applying traditional seasonal strategies.