There is an anomaly in the markets called "Monday effect". This theory suggests that stock markets tend to start the week on the wrong foot and become more enthusiastic as the weekend approaches. But is this an urban myth or a reality in Chile? 

To assess whether something similar occurs, we analyze the daily returns of the IPSA and calculate some basic statistics according to the day of the week: the probability that the day will be positive, the average return, the median, and the daily volatility. 

The first striking result is that Friday appears to be the day with the best average performance, with an average return of 0.135% and also the highest probability of recording positive returns (56.1%). In contrast, Monday is the only day with a negative average return, albeit marginal (-0.026%). This is consistent with the so-called "Monday effect" documented in several international markets. 

It is also interesting to note that volatility tends to be higher at the beginning of the week, with a standard deviation of 1.5% on Mondays, higher than on other days. However, although these patterns exist, their magnitude is relatively small. The differences between days are only a few tenths of a percentage point, while daily market volatility is around 1%. 

Why does this happen? 

There is no single clear cause, but there are some likely explanations. One of the most commonly cited is that on Mondays, the market must process news that accumulates over the weekend, such as political announcements, international events, commodity movements, or corporate decisions, while during the week, information is usually incorporated more quickly, with reactions generally occurring the following day.  

Another possible explanation is that some companies publish their bad news at the close of business on Friday to avoid price volatility while the market is open, thereby mitigating a potentially sharp decline. 

Others suggest that investors wake up in a worse mood on Mondays. Between the change in routine over the weekend and sometimes a lack of sleep, our brains are less prepared to make complex decisions on Mondays. It has been proven that when we are tired or in a bad mood, our aversion to risk skyrockets: we prefer security today to profit tomorrow [1]. In the market, this collective fatigue generates a "flight to safety," where the optimism of the IPSA is momentarily dampened while we all wait to regain our rhythm. 

In any case, these types of patterns can be understood as a simple statistical curiosity of the market. They show us that returns do not necessarily behave the same way every day and that, when analyzing the data with a broader view, certain temporal biases may appear. 

Matías Márquez
Financial Funds Analyst, Fynsa AGF 

[1] https://www.researchgate.net/publication/233411853_The_Financial_Costs_of_Sadness