September seasonals: Beware the weakness in risk assets | investingLive

Last September, the S&P 500 climbed 2% but that’s something of an outlier. Since the turn of the millennium, September is the worst month on the calendar for the index (by far).

Now some of that is due to one-off events like the financial crisis hitting hard in September 2009 but it’s a historically bad month for stock markets by any measure. I attest some of that to the return of policymakers to work following the quiet summer period. They tend to make waves and not all of them are welcomed by markets. There is also a temptation to take profits rather than risk them in the noisy final third of the year.

Here are some September seasonal trends (over the past 20 years):

• Second worst month for the
  DAX (after August) but is followed by a strong three month run.
• September is the start of a strong three-month seasonal run in natural gas (though this is largely priced into the strip)
• September is the start of a weak three-month seasonal run in WTI crude oil
• Worst month of the year for the MSCI world index
• Second worst month for silver
• Worst month for gold

The last point is particularly salient given that gold is looking like it could breakout today.