September is traditionally challenging for financial markets, with stocks often struggling. Historically, September has been the worst month for the S&P 500 over the past 20 years. Despite poor performances from 2020 to 2023, last year saw the S&P 500 gain roughly 2%. This year, the focus is on the Fed’s decision on 17 September, with traders anticipating a 25 bps rate cut. The US labour market report and US CPI report are essential for shaping these expectations.<\/p>\n
The Nasdaq and MSCI World Index also typically face difficulties in September. Gold usually does not fare well either, being the second worst-performing month for the metal in the last 20 years, with price declines in eight of the last ten Septembers. However, gold has performed well recently and did not follow the typical trend in 2024.<\/p>\n
Oil tends to struggle as September marks the middle of a weak period for prices, spanning from August to October\/November. Last year was no exception, continuing this unfavourable trend. Thus, market participants should consider historical trends when forming views on commodities and stocks this September.<\/p>\n
Given that September is historically the worst month for the S&P 500, we should be cautious about upside exposure. With the VIX volatility index currently trading near a multi-month low of 13.5, buying some cheap protective puts or even VIX calls could be a prudent hedge against long portfolios. This provides a buffer if the seasonal pattern holds true, especially after the strong rally we saw from 2024 snapped a four-year losing streak for the month.<\/p>\n
The major catalyst will be the Federal Reserve’s meeting on September 17th, so volatility around key data points will be our focus. We are watching this Friday’s jobs report and the CPI inflation data on September 11th very closely. Since fed funds futures are already pricing in a 90% chance of a rate cut, a surprise decision to hold rates steady would cause a significant market shock, making some cheap out-of-the-money options an interesting lottery ticket play.<\/p>\n
We also have to respect the historical data for gold, which shows September as its second-worst month, with prices falling in eight of the past ten years. Looking back, gold’s average return in September since 2005 has been a negative 1.2%. While we remember it bucked this trend amid the 2024 rally, the path of least resistance suggests looking for opportunities to sell into strength or buy puts.<\/p>\n
The seasonal playbook for oil also points to weakness as we move past the peak summer driving season into the fall. This view is supported by the latest Energy Information Administration report, which just showed another surprise build in crude inventories, hinting at softening demand. For us, this could mean initiating short positions in futures or buying puts on oil ETFs if prices fail to hold key technical support levels in the coming days.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" September historically poses challenges for markets, with stocks, gold, and oil often underperforming during the month.<\/p>\n","protected":false},"author":62,"featured_media":16988,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-29951","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/29951","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=29951"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/29951\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/16988"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=29951"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=29951"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=29951"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}