Stocktake: Investors fear further losses in September

August was a lousy month for global stocks, and investors are bracing themselves for further trouble in September. The S&P 500 was up 4.3 per cent in mid-August only to finish the month down 4.2 per cent. That performance was mirrored across the world, with every national exchange-traded fund (ETF) tracked by Bespoke Investment telling a similar story of dashed hopes and increasing fear.

The selling was especially heavy across Europe; the seven worst performers were all European countries, with Sweden (down 11 per cent) bottom of the pile. Consequently, the average national stock market is now 24 per cent below its 52-week high.

Bespoke doesn’t track Ireland, although the Iseq’s 23 per cent decline over the past year means the Irish market is right in line with its international counterparts. All but four countries – Taiwan, India, the US, and Canada – have fallen back below their pre-Covid highs.

History suggests September may prove similarly difficult. The Carson Group’s Ryan Detrick notes September has historically been the worst month for stocks: the worst month over the last 10 years, and the worst month over the past 20 years.

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Indeed, September’s performance has been even worse in years where stock markets had already been suffering. Detrick thinks US indices won’t fall below their mid-June lows, but cautions stocks are “by no means out of the woods here”.