"A three per cent rise in the value of Britain’s top companies so far this month – the biggest January increase in the FTSE 100 for 23 years – is worth thousands of pounds to workers in private pension plans.

"And financial experts believe the stock market could be set for a bumper 12 months as historically rallies in January are a good indicator of what happens to the market during the rest of the year."

Daily Express, 23 January 2012

This morning the Express led with a headline telling of a "pension boost for millions". As justification for its headline, it claimed the FTSE 100 index had risen by 3 per cent so far this month - its biggest rise for 23 years.

Full Fact tracked down the figures.

Analysis

Historical data on the FTSE 100 share price is available on Yahoo! finance and can provide breakdowns by day, week, or month.

The data confirms that, so far this year, the FTSE 100 has risen from an index of 5,572.30 to 5,728.50 - a jump of 2.8 per cent.

The Express' claim, however, that this represents the biggest January rise since 1989, seems more difficult to support.

Considering monthly rises, the FTSE 100's January changes can be charted back as early as 1985:

*2012 data is up to 23 January

Whilst the 1989 change is the largest January change on record - there appear to be other changes larger than the one seen this year that have taken place since 1989.

In 1998, the FTSE 100 opened at 5,136 and closed at the end of January at 5,458.50 - a rise of 6.3 per cent. Smilarly, 1997 and 1992 saw larger January rises. Even taking the 1998 rise only up to the 23 January (for exact comparison to the data available to us this year) shows a rise of around five per cent.

The Express could have been referring to weekly rises, since later on in its article it states the statistic slightly differently:

"Last week’s rise – the best weekly performance since 1989..."

Last week the FTSE 100 rose from 5,636.60 to 5,728.50 - a rise of 1.6 per cent. Historical weekly data shows the best ever week for the FTSE 100 was the week beginning 24 November 2008, which saw a 13.4 per cent rise. 

If we just consider January rises, again, the week beginning 26 January 1998 saw a rise of 5.3 per cent - far higher than the 1.6 per cent rise last week.

Do January rallies indicate a good year ahead?

Full Fact also noted the claim that financial experts say January rises are good indicators of what happens to the market for the rest of the year.

Full Fact therefore examined the historical correlation between January changes and changes for the rest of the year:

The darkly shaded columns show the years in which a January rise or fall was not accompanied by a parallel index movement for that year. Looking at these, there have only been two years - 1994 and 2001 - in which a January rise was not accompanied by an annual rise for the same year.

So historical trends indicate it is indeed broadly true that a January rise is followed by a good year for the FTSE 100.

Conclusion

Full Fact was unable to find any evidence to support the Express' assertion that the recent FTSE 100 rise is the largest such rise for 23 years.

While the monthly increase is the highest recorded for a decade, the weekly figures showed a number of more recent rises to cast doubt on the newspaper's claims.

However, crude historical precedent shows a January rise in the FTSE 100 is almost always followed by a corresponding annual rise for the index.

UPDATE (1/2/2012)

Now that January is over, we can confirm that the FTSE 100 closed at 5,681.60 for January, representing just under a two per cent increase for the month as a whole. Unfortunately, the three per cent rise for the first three weeks did not continue to the end of the month.

While this does not at all implicate the Express given the data they had available at the time, it does mean that this year's rise was only the biggest January increase for six years.