September seasonals highlight a painful backdrop for stock markets

<p>August isn't over yet but looking back at the<a href="https://www.forexlive.com/Orders/august-seasonal-trade-trends-20230731/" target="_blank" rel="follow"> August seasonal trends post</a>, this month has gone almost exactly to script. At the start of the month, I highlighted how it was a tough month for risk trades and that is what has unfolded along with pain in NZD/USD, which is typical in the month.</p><p>The only exception to the seasonal trend has been yields. August is traditionally a month when yields fall as bonds strengthen but it didn't play out that way this year as rates hit fresh cycle highs. In tandem with that, USD/JPY tends to struggle in August but it certainly didn't this year.</p><p>September is a similar story as it's the worst month on the calendar for the S&amp;P 500 and the MSCI world index. One twist is that the FX market doesn't follow the usual lead of stocks. For instance, NZD/USD tends to post gains in September and USD/CAD tends to decline (though the effect has waned in recent years). The yen also remains heavy.</p><p>In energy markets, seasonality kicks in strongly as natural gas ramps up and crude slides as driving season ends.</p><p>Overall, I'm continuing to find more and more reasons to be cautious on risk assets. China has helped to lift sentiment today but by cutting trading taxes rather than stimulating real demand. I don't think that's the foundation of a meaningful recovery.</p>

This article was written by Adam Button at www.forexlive.com.