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Despite a volatile month, the ASX 200 ended July up +2.3%, delivering almost exactly its average return over the past 20 years as the market heads into August. As we all know, there are “lies, damned lies, and statistics”, but keeping it simple, as the chart below illustrates, July is usually a very strong month for the local index:
- July and April are consistently the strongest months for the ASX 200 over both 10 and 20-years, although November has been a standout of the last decade.
Seasonality remains a useful guide, with the market historically performing best in April and through July & August before entering its traditionally weaker September period. Hence, if 2026 continues to follow its seasonal roadmap moving forward, this month should be ok before we hit a rocky September. The “Santa Rally” gets plenty of airtime, but the bulls should be going long well before December:
- If the market weakens into September, history suggests it’s the best tactical buying opportunity for the remainder of the year, allowing investors to position for the traditional November–December rally, provided they’re prepared to tolerate potential volatility in October.
As we sometimes cite the most uncomfortable position is often the best – remember that if/when the markets fall in September, the press are quoting the history of bygone October falls.
However, it’s one thing to quote that August seasonally delivers a positive return but considering it’s a big month for earnings we thought today was a good time to look at how the ASX 200 has traditionally performed under the hood through results season:
Over the past 20 years, Real Estate and Tech have been the standout performers. Elsewhere, Health Care (+2.4%) and Consumer Staples (+2.4%) also exhibit strong seasonal strength, reflecting reliable earnings delivery during reporting season. In contrast, Materials remains the clear seasonal laggard, averaging a 0.7% decline with positive returns in just 37% of Augusts, while Utilities has also consistently underperformed.
- Analysts are calling the miners to lead the earnings this month, let’s hope history is wrong this time with optimism high towards the Materials Sector.
We expect this month to deliver plenty of volatility on the stock level but we wouldn’t be surprised to see similar price action unfold to that experienced by the S&P 500 stocks in July:
- Stocks with elevated expectations are no longer being rewarded for simply beating forecasts, while companies delivering “not too bad” results are rallying where expectations were subdued.
