The idea of seasonal effects in investing is not new. As far back as 1894, the American humourist Mark Twain joked about the dangers of trading in October, which he quipped was one of several months that are bad for speculating in stocks. Everyone knows about Santa Claus rallies, “sell in May and go away,” and, of particular relevance this month, the September effect.
The September effect refers to a historical tendency for stock markets to weaken after the Labour Day holiday in the US. Since 1950, September has, on average, seen the S&P 500 decline 0.7% and is the only month with a negative average return over that period. Though the October effect is also notorious, that month has overall positive returns, despite events like the 1907 panic and 1987’s Black Monday.
According to Investopedia, stocks have been down in September 55% of the time since 1928. Nine of the 40 worst single-day drops in the S&P 500’s history took place in September. Given that several historical market crashes have landed in October after weak September performance, many traders have come to regard September as the start of the financial hurricane season.
There is no single authoritative explanation for why September is, on average, the worst month for markets. One theory is that institutional investors in North America are rebalancing portfolios and locking in tax losses before year-end. Others are that there is a “back to school” effect as normal life resumes after the northern hemisphere summer or that there is a seasonal lull between the summer holidays and the Christmas rush. There may also be an element of self-fulfilling prophecy: investors sell because they expect others to.
Whatever the case, it is important to note that September’s average is skewed by a handful of particularly bad years, including 1974, 2002 and 2022. Without these outliers, the picture would be less ugly. It is also worth bearing in mind that the data spans years of different economic, monetary and geopolitical conditions. The September effect is less likely to occur in more positive years for the market.
A final point is that the odds of a September downturn in the markets are still closer to the flip of a coin than to a certainty. In September 2025, for example, the S&P 500 gained 3.5%, to rack up its fifth consecutive month of gains and became the best September since 2010. This year, the S&P 500 and Nasdaq have produced marginally positive returns for the month, with the indices having risen by 0.80% and 0.09% as at yesterday’s close, respectively.
None of this can tell us as yet whether September 2026 will end up as a positive or negative month for markets. Inflation, interest rates, monetary policy, geopolitics and earnings outlooks are the factors that drive markets, rather than the date on the calendar. We will not know until markets close on 30 September whether 2026 will land among the 45% of Septembers that finish higher or the 55% that do not.
Past performance is no guide to future returns. Trying to time markets around seasonal patterns rarely pays off. The better approach remains to invest consistently and for the long term, riding out the highs and lows to accumulate long-term returns. Whether this September turns out to be one of the weak ones or not, it should not matter much to a long-term investor either way.
“The only function of economic forecasting is to make astrology look respectable.”
– US Economist and Professor of Economics at Stanford University, Ezra Solomon
“Anything is possible on the stock market. Even the opposite.”
– Stock Market Expert Andre Kostolany
Global News
- The six-month US-Iran war has settled into an increasingly dangerous stalemate, with renewed strikes this week but little progress towards a ceasefire or negotiated settlement. Iran has targeted merchant shipping and US bases across the region, prompting fresh US strikes on Iranian Revolutionary Guard sites used to target shipping in the Strait of Hormuz. With neither side showing signs of backing down, the conflict risks becoming prolonged, keeping the Strait and global energy markets exposed to further disruption.
- Oil is heading for its biggest weekly gain since July as renewed US-Iran hostilities intensify fears of prolonged disruption through the Strait of Hormuz. Brent crude traded near $96 a barrel early Friday, up more than 7% for the week, as the latest escalation reduced hopes of de-escalation. With roughly a fifth of global oil supply passing through the strait, continued disruption threatens higher fuel prices and renewed inflation pressure, complicating the outlook for interest rates.
- Abu Dhabi National Oil Company has restored its 922,000-barrel-a-day Ruwais refinery to full capacity after it was hit during the regional war. The restart, confirmed on Monday, has lifted diesel and jet fuel exports to about 70% of pre-war levels, providing relief to tight global fuel markets, particularly Europe, as diesel margins reach their highest in more than 15 years.
- Fed Chairman Kevin Warsh highlighted strong investment, corporate profits and labour markets alongside persistent inflation in his Jackson Hole address last Friday. Business investment is growing at around 9%, with more than half of this year’s increase linked to AI, while S&P 500 profits have risen more than 20%.
- The dollar is heading for a 0.7% weekly decline after touching its lowest level since May as expectations of a September Fed rate increase eased. Markets have cut the odds of a hike after Fed Governor Christopher Waller indicated he could support holding rates steady if inflation continues to moderate, while concerns over the US fiscal outlook are adding pressure on the currency. Meanwhile, the yen has gained sharply as expectations of a Bank of Japan rate increase intensify, highlighting the growing divergence between US and Japanese monetary policy expectations.
- The Dutch central bank moved 86 tonnes of gold from the US and Canada to London between March and August as heightened geopolitical risks prompted it to strengthen crisis preparedness. The move, announced on Wednesday, shifts a larger share of its 612-tonne reserve to the world’s leading physical gold market, giving the bank faster access to trade or mobilise its holdings during periods of financial stress.
- The Trump administration struck drug-pricing agreements with nine pharmaceutical companies on Monday, expanding its programme to 26 manufacturers covering nearly 90% of the US branded-drug market. Participating companies will offer state Medicaid programmes prices aligned with those charged overseas in exchange for tariff relief, increasing pressure on the industry to accept lower US prices while reducing tariff risk.
- The US secured backing from all G20 members except China on Tuesday for action against export-driven global trade imbalances, strengthening pressure on Beijing. China blocked consensus after Treasury Secretary Scott Bessent argued that its $1.2 trillion trade surplus and cheap exports were unsustainable. The broad support signals growing concern over Chinese overcapacity and raises the prospect of wider trade barriers beyond the US.
- Global AI data-centre investment is projected to reach $31.6 trillion through 2050, PwC said on Wednesday, dwarfing previous infrastructure booms such as railways and the internet. Annual spending is forecast to rise from about $800 billion this year to $1.8 trillion by 2050, with the US capturing nearly half of the total. Crucially, recurring upgrades to chips and other computing equipment, rather than construction, are expected to drive most long-term spending, reinforcing the scale and durability of the AI investment cycle.
- Nvidia has agreed to acquire AI platform Hugging Face for about $13 billion, significantly expanding its reach beyond chips into the open AI ecosystem. The deal, announced on Thursday, gives Nvidia control of one of the world’s leading platforms for AI models, datasets and developer tools, while the company has also invested $3.5 billion in Taiwan’s MediaTek. Combined, the moves broaden Nvidia’s influence across models, developers and chip design as major technology customers increasingly develop processors that could reduce their reliance on its hardware.
- Broadcom forecast AI revenue will reach $115 billion in 2027 and double to $230 billion in 2028 as major technology companies increasingly develop custom processors, broadening the AI chip boom beyond Nvidia. The outlook came on Wednesday as third-quarter AI chip sales more than tripled to $16.7 billion, although a slightly weaker-than-expected fourth-quarter revenue forecast sent the shares 4% lower.
- Volkswagen approved the most extensive restructuring in its 89-year history on Thursday, including around 50,000 additional job cuts on top of 50,000 already under way. The overhaul aims to cut costs and excess capacity as Europe’s largest automaker battles US tariffs, weak Chinese demand and intensifying competition. Shares jumped 7.9% as investors welcomed progress on the turnaround.
- As at Thursday’s close the S&P 500 was 0.47% up for the week.
Local News
- The Middle East conflict has added at least R56 billion to South Africa’s fuel import costs since February, with the oil shock now feeding more sharply into the domestic economy. Petrol rose R1.34 a litre and diesel by as much as R3.15 on Wednesday, adding to household and business costs and threatening higher transport and food prices. The renewed inflation pressure will be closely watched by the South African Reserve Bank ahead of its 23 September policy meeting.
- US President Donald Trump on Wednesday extended the African Growth and Opportunity Act (AGOA) until the end of 2028, giving South African exporters continued preferential access to the US market. The two-year extension falls well short of the 15-year renewal South Africa had sought, while the country’s eligibility will be reviewed again for 2027 amid strained relations with Washington. South Africa accounted for about half of the $8.23 billion in goods exported under AGOA in 2024, highlighting the importance of continued access, although newer US tariffs have reduced some of the programme’s advantages.
- Germany and France on Wednesday committed €300 million (R5.6 billion) in concessional financing to improve electricity, water and waste services across South Africa’s eight metros. The funding supports National Treasury reforms to strengthen municipal governance and financial sustainability amid deteriorating services and mounting financial pressures. The metros account for about 85% of South Africa’s economic activity, making their recovery important to the country’s growth outlook.
- The DA is targeting control of 60 municipalities after South Africa’s November local elections, more than double the roughly 27 councils it currently governs. The party said on Monday that Johannesburg, Ekurhuleni and Tshwane are key targets, while it also sees opportunities in KwaZulu-Natal. The elections could materially reshape municipal governance in major economic centres, with implications for service delivery, infrastructure and the operating environment for businesses.
- Manufacturing activity fell to its weakest level this year in August as weak domestic demand and rising costs intensified pressure on the sector. The Absa PMI, released on Tuesday, declined for a fourth consecutive month to 45.8, while the business activity index dropped sharply to 40.2. With new orders also weakening and higher fuel prices set to increase input costs, the data point to little prospect of a near-term recovery in factory activity.
- South African business confidence remained weak in the third quarter, with the RMB/BER index slipping one point to 38 as concerns over municipal service delivery, infrastructure and policy uncertainty weighed on sentiment. The survey, released on Wednesday, showed confidence declining in four of five sectors, with manufacturing particularly weak at 27. Businesses are increasingly looking to November’s local elections for greater policy certainty and improved municipal performance, which could prove important to investment and economic confidence.
- The trade surplus widened to R20.1 billion in July from R17.2 billion in June, data released on Monday showed, as South African exports rose and imports declined. Vehicle, manganese and coal shipments helped lift exports, while trade with other African countries remained strongly positive. The improvement may prove difficult to sustain, however, as elevated oil prices increase the country’s fuel import bill and put pressure on the external balance.
- Proposed reforms to South Africa’s National Payment System would allow non-bank fintechs direct access to payment clearing and settlement infrastructure. South African Reserve Bank Governor Lesetja Kganyago said on Wednesday that greater innovation and competition must be matched by consistent regulation, with equivalent payment activities subject to the same rules whether offered by banks or fintechs. The reforms could broaden participation while reshaping competition between traditional banks and digital financial providers.
- The cost of medical scheme membership in South Africa could fall by as much as 30% if everyone earning above the tax threshold were required to join, according to research released on Wednesday. About 8.7 million taxpayers currently do not belong to a scheme, and bringing them into the system could spread risk and lower premiums. The proposal offers a significant alternative in the debate over healthcare reform and funding.
- South Africa’s online retail market is forecast to grow 22.5% to R159 billion this year, after e-commerce surpassed 10% of national retail sales for the first time, data released on Wednesday showed. Consumers are shopping online more frequently and across more categories, with convenience overtaking price as the main attraction. As the market matures, competition is increasingly shifting from rapid sales growth towards profitability, customer loyalty and more efficient delivery.
- Eskom more than doubled annual profit to R30.3 billion as improved generation, higher tariffs and lower costs strengthened its finances, results released on Monday showed. However, electricity sales fell 6.2%, prompting efforts to revive industrial demand and increase regional exports as surplus capacity grows. The utility has also earmarked R21.3 billion for decommissioning and clean energy, while rising municipal debt remains its biggest financial threat.
- Discovery Bank reported its first full-year profit of R370 million on Thursday, as it added about 1,000 clients a day to reach nearly 1.6 million customers. The bank is targeting R3 billion in profit by 2029 as it expands its “superbank” strategy, integrating banking with Discovery’s broader health and financial services ecosystem to drive growth. About 70% of new business now comes from customers outside Discovery’s existing client base.
- Woolworths is reorienting its growth strategy around its food business after the division continued to gain market share and delivered above-market sales growth of 5.7% in the year to June. Results released on Wednesday showed group sales rising 4.3% to R84.5 billion, while earnings from Fashion, Beauty and Home fell 14.1%. New CEO Sam Ngumeni plans to build on Food’s strength, including through digital growth and adjacent categories, as he seeks to improve returns across the wider group.
- Shoprite is acquiring the Vida e Caffè chain, with more than 400 stores, as it expands beyond groceries into adjacent consumer markets where it can leverage its extensive distribution network. The deal, announced on Tuesday, gives Africa’s largest supermarket group an established coffee platform that could be scaled through its existing store footprint and supply chain. The acquisition reflects Shoprite’s broader strategy of using its scale to pursue new sources of growth beyond traditional food retail.
- Motus, which sells one in every five new cars in South Africa, is benefiting from the rapid shift towards affordable Asian vehicles, with sales of Chinese and Indian brands more than tripling in the year to June. Results released on Wednesday showed group profit before tax rising 20%, as its expanding Asian brand portfolio captured changing consumer preferences. The performance highlights the growing influence of Chinese and Indian manufacturers in South Africa’s vehicle market.
- As at the time of writing, the rand was 1.2% stronger against the dollar, and the ALSI was 0.6% down for the week.
Sources: Dynasty, Business Day, Reuters, Bloomberg, Daily Maverick, ITWeb, AFP, IOL, etc.
