With markets here and in the US in a state of flux we will thankfully bid goodbye to the historically worst month of the year next week and enter October. October is not, historically on an average basis, a bad month for stock markets, unlike September, it’s just that it has a rather bad reputation.
The crashes of ’29 and ’87 occurred in October, as did the “mini-crash” of ’89. Wall Street peaked in October 2007 before beginning a slow-rolling crash culminating in the collapse of Lehman Bros in September 2008, which led into a shocking October.
Perhaps the good news heading into this October – arguably a period worryingly set up for a crash in the circumstances – is that the S&P500 has already pulled back -10% from its September high. The crashes of ’29, ’87 and ’89 followed parabolic rallies, as did the Tech Wreck of 2000, but that began in March.
Crashes come out of the blue, so the more investors fear a crash this month than has already been booked, the less likely it is to happen. Although that doesn’t mean it can’t.
The US will see some interesting data points next week, including consumer confidence, the September manufacturing PMI, private sector jobs and non-farm payrolls, August PCE inflation and construction spending and factory orders. There will also be another revision of June quarter GDP, which will be redundant.
Wednesday is manufacturing PMI day across the globe, except for China, which reports both manufacturing and services PMIs on the Tuesday.
The only other data release of note in Australia next week, if the PMI is of any note, is August retail sales, but then we’ve already had a preliminary reading from the ABS.
In the stock market, the ex-divs roll quietly on while the list of AGMs quietly begins to build.