The Jane market brief
Have you heard of the September effect?
Have you ever noticed that September seems to have a bit of a bad reputation?
Well, financial markets have noticed it too.
September has historically been the weakest month of the year for shares. Since 1945, the S&P 500* has fallen by an average of around 0.6% in September. On the ASX,* the picture is similar: since 1980, the index has averaged a 0.42% decline in September, finishing higher just over half the time.
But before you start selling everything every August, there is an important catch.
Seasonality is a pattern, not a prediction.
So why September?
There is no single answer.
Some economists point to investors returning from the northern hemisphere’s summer break and trading activity picking up again. Companies may issue new securities. Investors may rebalance* portfolios or raise cash after the quieter summer months.
And then there is something called a self-fulfilling expectation. If enough investors expect September to be difficult, they become more cautious - which can contribute to exactly the weakness they were expecting in the first place.
Markets are influenced by human behaviour. Always.
September also has a memorable history. Lehman Brothers collapsed in September 2008. UK travel company Thomas Cook folded in September 2019. Chinese property developer Evergrande began its very public collapse in September 2021.
So yes. The reputation exists for a reason.
Did September 2026 live up to it?
Well. It didn't exactly help.
The S&P/ASX 200* fell 3% during September, one of the weaker months for Australian shares this year. Several forces were working against markets at the same time: geopolitical tensions keeping energy prices elevated, growing concerns about AI investment returns, and government debt levels attracting more scrutiny from bond markets*.
When inflation looks harder to control, you start to know the music: interest rates can stay higher for longer.
And that is exactly what happened. The Reserve Bank of Australia* raised its cash rate* by 25 basis points* to 4.60% on September 29, its fourth hike of 2026, and the highest level in 15 years. An extra $460 per month on an average mortgage, according to the ACTU (Australian Council of Trade Unions)*.
Not a fun end to the month.
But there was a bright spot
Not every part of the Australian market struggled.
Healthcare was one of the strongest areas, finishing September up around 3.4% while the broader market fell, supported by strong company results and the sector's reputation as a defensive* safe haven.
There is a reason healthcare is often considered more defensive.
Think about it this way: you might postpone buying a new sofa if money is tight. You might delay a holiday. But you are unlikely to stop buying essential medication simply because your salary has not increased.
Healthcare demand is therefore often less sensitive to the economic cycle than areas like retail or travel. That does not make healthcare stocks risk-free. But it helps explain why investors often turn to defensive sectors when markets become more uncertain.
And there was one more small sign of optimism at the very end of the month. On September 30, the ASX 200* jumped 0.9%, its strongest daily gain in several weeks, helped by softer-than-expected inflation data.
So. Back to happy days?
Not quite. But perhaps a little less gloomy.
And then there's fuel
You know that moment when you drive past a petrol station and think: wasn't fuel cheaper last time I looked?
Your memory is not playing tricks on you.
Australian diesel prices reached around $2.86 per litre in capital cities in late September. And this is not just about what you pay at the pump. Diesel moves food, goods and materials across the country. When it becomes more expensive, that cost eventually shows up in the price of the things you buy.
The reasons are global: ongoing conflict in the Middle East, disrupted refining capacity, and tighter fuel exports from Russia. China, which had been supplying the Asian market, has pulled back to replenish its own domestic reserves.
Australia, which relies heavily on imported fuel, is particularly exposed.
What should you take from September?
If September taught us anything, it is that markets rarely move because of one single event.
This month we had geopolitical tensions pushing oil prices higher, inflation* proving stickier than expected, the RBA* hiking rates to a 15-year high, and bond markets* growing louder about government debt levels.
At the same time, some sectors, like healthcare, proved more resilient.
And that is exactly why diversification* matters. You cannot predict when the next shock will arrive, which sector will outperform, or whether next September will be better or worse.
What you can control is how prepared your portfolio is for different scenarios.
So as we leave September behind, maybe the lesson is not to fear the September Effect. It is to remember that markets can be unpredictable, but your approach to them does not have to be.
We're here with you,
Julia Scott
CEO and Founder of Money by Jane
Chartered Accountant with 20+ years helping women build financial confidence
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Glossary
S&P 500 The benchmark index tracking 500 of the largest companies listed in the US. When people say "the market" in a US context, this is usually what they mean.
ASX / ASX 200
The Australian Securities Exchange, and the index that tracks the 200 biggest companies listed on it. This is the local equivalent of the S&P 500 - the main scoreboard for Australian shares.
Rebalance (a portfolio)
Adjusting your investments back to your original target mix after some have grown faster than others. If shares have done well, they might now make up more of your portfolio than you intended - rebalancing brings it back in line.
Reserve Bank of Australia (RBA) Australia's central bank. Among other things, it sets the official interest rate that influences what banks charge on loans and pay on savings.
Cash rate The interest rate the RBA sets, which flows through to the interest rates on mortgages, savings accounts and loans across the country. When the news says "rates went up," this is the rate they mean.
Basis points A unit used for small interest rate changes. 100 basis points = 1%. So "25 basis points" means 0.25%.
Australian Council of Trade Unions (ACTU)
The peak body representing Australia's trade union movement - they often comment publicly on cost-of-living issues like rate rises.
Bond markets
Where governments and companies borrow money by issuing debt (bonds) to investors. When bond markets get "nervous" about government debt, it usually shows up as higher borrowing costs for that government.
Inflation The rate at which prices for goods and services rise over time, eroding how far your money stretches. The RBA raises the cash rate partly to try to slow inflation down.
Defensive sector / defensive stock A type of company (like healthcare) whose sales tend to hold up even when the economy slows, because people keep buying what they genuinely need regardless of their financial situation.
Diversification Spreading your investments across different companies, sectors or asset types, so that if one does badly, your whole portfolio doesn't suffer the same hit.
Information provided by Money by Jane is general in nature and does not take into consideration your personal financial situation. It is for educational purposes only and does not constitute financial advice nor financial product advice in any way. Remember, the value of any investment can go down as well as up. Before acting, you should consider seeking independent personal financial advice that is tailored to your needs from an appropriately licensed or authorised financial adviser. 