Will the UK stock market race higher after St. Leger Day?

The 250th running of the St Leger is due to take place at its traditional home of Town Moor, Doncaster on Saturday and the stable of trainer Aidan O’Brien has a stranglehold on the big race, as the masterful Irishman trains two of the top three in the betting.

Stock market investors will be keeping an eye on the final ‘classic’ horse race of the Flat season for different reasons, given the old saying about ‘Sell in May, go away and come back again on St. Leger day.’

This saying is based upon how, on average, the UK’s FTSE All-Share index has historically done best between January and April and then again after mid-September, with summer being a bit quiet by comparison.

The UK’s FTSE All-Share has not actually stayed true to type in 2026, because it has moved higher throughout the summer, despite the ongoing war in the Middle East and fresh ructions in the government bond market and recorded a gain of more than 4% since 30 April.

However, the saying survives for a reason, which is it contains more than a grain of truth.

This pattern is not visible every year (investing would be far less difficult if it were). The FTSE All-Share has risen through to the end of April, dropped through to mid-September, and then gained until the end of a year on just 16 occasions since 1965.

The UK market has not conformed to the traditional pattern this year, either, to beg the question of what the UK stock market will do for the rest of the year (and then beyond) after its strong performance in the first eight-and-a-bit months of 2026.

Before 2026, the All-Share index had gained in both January-April and May to the St Leger on 23 previous occasions since its inception in the early 1960s.

In those instances, the benchmark index progressed again in the final third of the year on seventeen occasions to record an average gain of 5.6% in the final three-and-a-half-month span.

The outliers were 1977, 1980, 1989, 1991, 2014 and 2024 when (it could be argued) fears of inflation or recession, or at least a mid-cycle growth pause in the case of 2014, stalked the UK equity market, although such worries did not hold back the index on other occasions.

Oddly, September is the most difficult month of the year for UK equities, even if October is the one that conjures up the worst nightmares because of the crashes of 1929 and 1987.

The FTSE 100 may have a shorter lifespan than the All-Share, as its launch dates back to 1 January 1984, but it also shows, on average, the pattern of gains between January and April, a summer lull and then a final, year-ending (Santa) rally.

The April-to-September gains recorded so far mean that the FTSE 100 and FTSE All-Share stand close to their all-time highs, despite wider economic and political uncertainty in the UK and beyond.

A better example of the old adage that ‘markets climb a wall of worry’ will be harder to find, given how the FTSE 100 is up by more than double from its COVID-19 low of 2020, and that is before the dividends and share buybacks that continue to supplement healthy capital gains.

The UK has long been unloved, yet it has continued to defy its critics by providing strong total returns.

Bullish or bearish narratives are all well and good, but it is valuation that is the ultimate arbiter of investment return and the UK’s unloved nature means it could still be undervalued.

The FTSE 100 trades on 12.7 times forward earnings for 2026 and 11.7 times for 2027, according to consensus analysts’ forecasts. Neither multiple looks expensive relative to historic peaks or averages. Moreover, the index’s estimated dividend yield is 3.5% for this year and 3.7% for next.

Share buybacks announced to date worth £46.7 billion are supplementing those dividends, to take the FTSE 100’s estimated total ‘cash yield’ for the year to 5.5% for 2026, a figure that still handily beats the Bank of England base rate, the 10-year gilt yield and the prevailing rate of inflation.

The 10-year gilt yield is, admittedly, catching up fast and further increases in the returns available from fixed income could start to act as a brake on the UK stock market, although any sign of sticky and elevated inflation could still persuade portfolio builders to stick with shares rather than fixed income.