Market returns consistently negative in September

Since 1990 the FTSE All-Share Index's average return for the month has been -1.2 per cent.

September is a poor month for the stock market. Since 1990 the FTSE All- Share index’s average return in September has been -1.2 per cent. This record has often made September the worst month of the year for shares. Since 2000 the index’s average return in September has been even worse, at -1.6 per cent.

Over the longer term, the returns in half of all Septembers are positive. But when the market declines in the month, the fall can be very large. The FTSE All-Share index has declined by more than 8 per cent three times in September since 2000, for example.

The big problem for investors in September is volatility: share price volatility is often at its highest level of the year this month. The situation is even worse among mid-cap stocks. Since 2000, on average the FTSE 250 index underperforms the FTSE 100 index by 1.4 percentage points in September.

In an average September the market tends to gently drift lower in the first three weeks of the month before rebounding slightly in the final week, although the final trading day of the month has historically been one of the weakest.

Gold tends to be strong in September: since 1968 the average return in the month has been 1.8 per cent, making September the second-strongest month of the year for gold, after February. On the sector front, September tends to be good for tobacco, nonlife insurance and beverages, and relatively poor for industrial transportation, real estate investment trusts, and electronic and electrical equipment.

The NYSE closed on 3 September (Labor Day), FTSE quarterly index reviews will be announced on 5th, and the US non-farm payroll report is on 7th.  

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