The Stock Market in September

September has not been a good month for investors. Since 1990 the average return of the FTSE All-Share Index in September has been -1.2%; the worst return of any month in the year.

However, although the average return is bad in the month, over the longer-term about half of all Septembers actually have positive returns. And, in the last 13 years, the market has only fallen in September in four years.

Monthly returns of FTSE All Share Index - September (1984-2016)

The problem is that when the market does fall in this month, the falls can be very large. For example, as can be seen in the accompanying chart, the FTSE All-Share Index has declined over 8% in three years since 2000. So, the big problem for investors in September is volatility – share price volatility is at its highest annual point in September.

Large caps v mid caps

The situation is even worse for mid-cap stocks. Since 1986, on average the FTSE 250 Index under-performs the FTSE 100 Index by 0.7 percentage points in September – making September, along with October, the worst months for mid-cap stocks relative to the large-caps

Average month

In an average month for September the market tends to gently drift lower for the first three weeks before rebounding slightly in the final week – although the final trading day (FTD) of the month has historically been one of the weakest FTDs of all months in the year.

Gold

In contrast to equities, gold tends to be strong in September: since 1968 the average gold price return in the month has been 1.8%, making September the strongest month of the year for gold. Recently, since 2000, gold’s September has been even higher at 2.3%. It should be noted that silver has also been historically strong in September.

Sectors

On the sector front, September tends to be good for Electricity stocks, Food & Drug Retailers, Mobile Telecommunications, Pharmaceuticals & Biotechnology, and relatively bad for Aerospace & Defense, Chemicals, Electronic & Electrical Equipment, General Retailers, Media, Technology Hardware & Equipment.

Diary

In the diary this month are: the US Nonfarm payroll report on the 1st, the NYSE closed on the 4th (Labor Day), ECB Governing Council Meeting on the 7th, MPC interest rate announcement on the 14th, and it’s Triple Witching on the 15th.

Sell in May…

Saturday 16th September will see horse racing at Doncaster – the St Leger Stakes. Of note for those investors who adhere to the adage “sell in May, go away and don’t come back till St Legers day”.


Article first appeared in Money Observer

Further articles on the market in September.

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The Stock Market in September

After summer the stockmarket tends to burst back into life in September. Unfortunately, the renewed activity in shares tends to be on the downside. Since 1982 the FTSE All Share Index has an average return of -1.1% in this month, this gives September the worst record for shares for any month in the year. And things haven’t improved recently, since year 2000 the average month return in the month has been -1.9%.

Monthly returns of FTSE All Share Index - September (1984-2015)

However, although the average return is bad in the month, about half of all Septembers actually have positive returns. The problem is that when the market does fall in this month, the falls can be very large. For example, as can be seen in the accompanying chart, the FTSE All-Share Index has declined over 8% in three years since 2000.

Mid-cap stocks

The situation is even worse for mid-cap stocks. On average the FTSE 100 Index out-performs the FTSE 250 Index by 0.7 percentage points in September – making September, along with October, the worst months for mid-cap stocks relative to the large-caps

Although October has a reputation for being a volatile month for shares (due to some very large market falls in the month, for example in 1987), since 2000 the most volatile month for stocks by a significant margin has been September.

The average September

In an average month for September the market tends to gently drift lower for the first three weeks before rebounding slightly in the final week – although the final trading day (FTD) of the month has historically been one of the weakest FTDs of all months in the year.

In contrast to equities, gold and silver tend to be relatively strong in September.

Sectors

On the sector front, September tends to be good for Electricity stocks, Food & Drug Retailers, Mobile Telecommunications, Pharmaceuticals & Biotechnology, and relatively bad for Aerospace & Defense, Chemicals, Electronic & Electrical Equipment, General Retailers, Media, Technology Hardware & Equipment.

Diary

In the diary this month are: the US Nonfarm payroll report on the 2nd, the NYSE closed on the 5th (Labor Day), ECB Governing Council Meeting on the 8th, MPC interest rate announcement on the 15th, and it’s Triple Witching on the 16th. And, finally, Saturday 10th September will see horse racing at Doncaster – the St Leger Stakes. Of note for those investors who adhere to the adage “sell in May, go away and don’t come back till St Legers day”.


Article first appeared in Money Observer

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The Stock Market in September

September – the worst month of the year for shares! After the summer lull, things can get exciting again for investors in September. Since 1982 the FTSE All Share Index has on average fallen 1.0% in this month – the worst average return of any month in the year. And things haven’t improved recently: since 2000 the average return in September has been even worse at -1.8%. The probability of a positive return in September is 47%, which places it just better than that for June.

Monthly returns of FTSE All Share Index - September (1984-2014)

As well as poor average returns, the volatility of returns has been higher than any other month since 2000. Having said that, the market has actually risen in September more times than it has fallen since 2000 – it’s just that when the market does fall it tends to be a significant decline. This can be seen in the accompanying chart which plots the performance returns of the FTSE All Share Index for each September since 1984.

And the dismal performance in this month is not limited to the UK. The average monthly returns across 70 world equity markets are lowest in September; the month is the worst month for equities in 25 countries, and only the strongest in one country – Venezuela.

The average September

In an average month for September the market tends to gently drift lower for the first three weeks before rebounding slightly in the final week – although the final trading day (FTD) of the month has historically been one of the weakest FTDs of all months in the year.

But, however bad the month is for large caps, it is even worse for mid-cap cap stocks. On average the FTSE 100 Index out-performs the FTSE 250 Index by 0.7 percentage points in September – making September, along with October, the worst months for mid-cap stocks relative to the large-caps.

Shares

In the last ten years the five FTSE 350 stocks with the strongest performance in September have been: Diploma, Law Debenture, Polar Capital Technology Trust, United Utilities, and Dechra Pharmaceuticals. While the weakest stocks have been Premier Farnell, Pace, Compass Group, and SVG Capital.

Diary

Dates to watch this month are: 2 Sep – FTSE 100 Index quarterly review, 4 Sep – US Nonfarm payroll report, 7 Sep – NYSE closed (Labor Day), 10 Sep – MPC interest rate announcement, 16 Sep – Two-day FOMC meeting starts, and 18 Sep – Triple Witching.


Article first appeared in Money Observer

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Average market behaviour in October

The following chart plots the average performance of the FTSE 100 Index during October since 1984.

Average month chart - October (2014)As can be seen, historically the market has risen the first two weeks of October, then fallen back the following week and a half, but ended strongly over the last few days.


 

September 2014

The following chart shows the average performance of the market in September (1984-2013) and overlays the actual performance in September 2014.

Average month chart - September overlay September 2014 (2014)As can be seen, the market in September 2014 broadly followed the general trend for all Septembers, falling consistently for the first three weeks, but then selling off more than usual in the final week in 2014.

 

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Last trading day of September

Tomorrow will be the last trading day (LTD) of September.

Since 1984 the market has on average fallen 0.07% on the LTD of September, which makes it the second weakest LTD of the year. And returns have been positive in September since 1984 in only 43% of years.

Since 2000 the average change on the September LTD has been even weaker at -0.38%, the market has only risen three times in the last 14 years on the this day, making it the weakest LTD of all.

The following chart shows the FTSE 100 Index returns for every September LTD since 1984.

Last trading day of September (1984-2013) [2014]

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The Stock Market in September

After a traditionally quiet time for equities over the summer, things liven up for investors in September. But not necessarily in a good way – September is the worst month in the year for shares. Since 1982 the FTSE All Share Index has fallen on average 1.0% in this month. And since year 2000 the average month return has been even worse at -1.7%. Along with poor average returns the volatility of returns has been higher than any other month since 2000. Having said all that, the market has actually risen in September more times than it has fallen since 2000 – it’s just that when the market does fall it tends to be a significant decline. This can be seen in the accompanying chart which plots the percentage performance of the FTSE All Share Index for each September since 1982.

Monthly returns of FTSE All Share Index - September (1982-2013)Interestingly, the UK market is far from unique in having a weak September. A recent academic paper announced the result of a study of the monthly performance of equity markets in 70 countries. The research found that on average the worst month for stock performance was September – on average shares rose only 0.07% across all 70 markets in this month, with September being the weakest month in 25 countries.

FTSE 250

So, overall, not a rosy picture for shares in this month. And it is especially bad for mid-cap stocks. On average the FTSE 100 Index out-performs the FTSE 250 Index by 0.7 percentage points in September – making September, along with October, the worst two months for mid-cap stocks relative to the large-caps.

In an average month for September the market tends to gently drift lower for the first three weeks before rebounding slightly in the final week – although the final trading day (FTD) of the month has historically been one of the weakest FTDs of all months in the year.

Sectors

In the last twenty years the sectors that have been strong in September have been: Pharmaceuticals & Biotechnology, Food & Drug Retailers, and Electricity. While the weak sectors have been: General Retailers, Chemicals, and Electronic & Electrical Equipment.

Diary

Dates to watch this month are: 1 Sep – NYSE closed (Labor Day), 4 Sep – MPC interest rate announcement, 5 Sep – US Nonfarm payroll report, 10 Sep – FTSE 100 Index quarterly review, 16 Sep – Two-day FOMC meeting starts, 19 Sep – Triple Witching.


Article first appeared in Money Observer

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Last trading day of September

Next Monday will be the last trading day (LTD) of September.

As explained in the 2013 edition of the Almanac the LTDs of months used to be stronger than average, but in recent years they have been weak. This is quite different from the first trading days of months which strongly out-perform the average for all days, and where the effect has strengthened in recent years.

Since 1984 the market has on average fallen 0.05% on the LTD of September, which makes it 10th in the ranking of month LTDs.

Since 2000 the average change on the September LTD has been even weaker at -0.35%, the market has only risen three times in the last 13 years on the this day, making it the weakest LTD of all.

The following chart shows the FTSE 100 Index returns for every September LTD since 1984.

Last trading day of the month for September

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Average market behaviour in September

The following chart plots the average performance of the FTSE 100 Index during September since 1984 (more info on this type of chart).

Average month chart of September for FTSE 100 Index

As can be seen, historically the market has declined steadily throughout September, somewhat leveling out in the final week.


 August 2013

The average chart for August was posted a month ago here. The following reproduces that chart and overlays the actual FTSE 100 for August 2013.

 

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Strong/weak sectors in September

Strong sectors

The following table lists the sectors that have historically been strong in September.

Sector TIDM
Pharmaceuticals & Biotechnology
Food & Drug Retailers
Electricity
Mobile Telecommunications

Weak sectors

And the following table lists the sectors that have been weak in this month.

Sector TIDM
Industrial Engineering
Aerospace & Defense
General Retailers
Chemicals
Electronic & Electrical Equipment
Media
Real Estate Investment Trusts
Technology Hardware & Equipment
Industrial Metals
Automobiles & Parts

 

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