No matter what filter, yardstick or obscure factoid analysts can dredge up to try and gild the lily, global markets and Wall Street in particular had a very rough September to cap off a dreadful quarter – the third in a row.
And the first trading session for October saw more of the same with the ASX opening the final quarter of the year with a small loss of just over 17 points or 0.27% in the ASNX 200 which ended at 6,456.
After September’s slide, investors are seeing more of the same this quarter, but hopefully not as miserable as last month was.
The past six months saw yet another confirmation of the old market adage for investors we told you in late April and early May about ’Sell in May and go away.’
How true that proved to be – the S&P 500 lost 1,000 points from the last day of April to the last day of September (as indeed did the ASX 200).
For September US shares lost 9.3% and global shares were down 8.5%, which saw September live up to its reputation as the weakest month of the year for shares.
Australian shares fell 1.5% for the week and 7.3% in September.
And in late August and early September we wondered if September would follow another old saw which said the month was the worst for markets (according to the US Stock Traders Almanac).
There are solid reasons for this weakness – investors return from summer holidays in the US, UK, Europe and other northern hemisphere markets and economies seem to reawaken after the torpors of summer.
This year though (apart from the long and ongoing droughts in Europe, parts of the US and southern China) summer seemed not to happen in markets, with continuing fallout from Russia’s invasion of Ukraine – energy shortages, rising prices (especially gas), surging inflation, surging interest rates and growing worries about an economic slowdown or recession in 2023.
It was this shopping list of factors which made summer into such a loss-maker for investors and for commodities. This was especially so in the three months to September, which ended with a financial crisis in Britain that threatened to freeze the country’s financial system and ruin the $1.3 trillion defined benefits pension industry.
For stockmarkets it was not a good time to be long (unless you had nerves of steel).
Stocks fell in choppy trading Friday as Wall Street closed out a terrible week, month and quarter that sent the S&P 500 to a new 2022 low.
Last Friday saw the Dow close below 29,000 for the first time since November 2020. The index fell 500.10 points, or 1.71%, to 28,725.51. The Nasdaq was 1.51% lower, ending the day at 10,575.62.
The S&P 500 lost 51% on Friday, falling to 3,585.62. The index closed out its worst month since March 2020 at the start of the pandemic.
For the week, the major averages posted sharp losses. The S&P 500 slid 2.9% for the week. The Dow tumbled 2.9%, and the Nasdaq fell 2.7%.
For September, the Dow tumbled 8.8%, the Nasdaq lost 10.5% and of course the S&P 500 shed 9.3%.
According to Bespoke Investment Group, the September quarter was the first time in about 80 years that the S&P 500 posted a quarterly loss after being up more than 10% (14.3%) at one point during that three-month period.
The ASX 200 didn’t rise as far as the S&P 500 did in July, but tracked it lower from the peak of 7,009 on September 13, falling 7.6% which accounted for all of the 7.3% fall for the month.
And for the rest of the year? There are plenty of things the economy and markets can stumble and lose their way over in the next three months.
There’s the US and global September 30 earnings season, continuing high levels of inflation and at least one, perhaps two more rate rises from major central banks (including today’s increase from the Reserve Bank of Australia and tomorrow’s lift in NZ).
And with those rate rises fears about the extent of falling house prices and the rising chances of a sharp slowdown in economic activity or worse still, the market worries that there will be a recession next year.
That should be seen alongside the new federal budget for Australia later this month which will reframe fiscal policy for the next six months or so
There’s also the continuing invasion of Ukraine and Vladimir Putin’s increasing instability, plus the wobbly UK financial markets, economy and political situation.
There are also those reports about problems at Credit Suisse, a big, globally important bank that could presage a wider financial crisis to come – especially if the situation in Britain drags on – or it could be just market huff and puff.
