When Autumn hits, we start flocking to Kathmandu and Macpac to get our hands on new winter jackets before it gets too frosty.

When Spring peeks through the clouds, there’s pollen in the air, and we're sprinting to the pharmacy for antihistamines.

And just like the seasons of weather, there’s seasonality in the stock market too. 

There are months where the market historically tends to pop off, and months where the market has historically taken things slow.

When is the ASX popping off?

At different times in the year, there are different levels of demand for ASX shares, and this creates ebbs and flows across months.

The average monthly growth among ASX shares is 0.62% since 1985, but the months where the ASX tends to smash the average are April, July, and December.

Since 1985, Australian share price gains have averaged 2.4% in April, 2% in July, and 1.9% in December.

Which is the ASX at its weakest?

On the other hand, May, June, September, and October tend to be the weaker months for the ASX, with September being the weakest of them all.

Now, the weaker performance in May and June (ie. the end of the financial year) can largely be attributed to tax-loss selling.

In other words, investors trying to sell shares that are sitting at a loss by the end of the financial year.

This allows them to offset those capital losses against other capital gains and ultimately reduce their tax obligation.

What’s the deal with weak performance in September and October?

For this, we have the United States to thank.

September is the end of the financial year in the US, and that’s when we see tax-loss selling in their market.

But, the downturn in US stocks becomes replicated in Australia (because let’s be honest, we always take the US lead).

And this leads to weakened performance in Australia too.

Yep, the Australian stock market is the younger sibling that got its personality from its older sibling, the US market, so it follows a similar pattern in seasonal movement.

After the downturn in September/October, investors have historically started to buy back stocks in the last quarter of the calendar year.

Additionally, there's a phenomenon called the “January effect” where stocks in the US have performed well at the beginning of the new year. 

Investors tend to be high-spirited and optimistic when a new year kicks off. You know, new year new me vibes. 

But in the last few years, anticipation of the “January effect” has brought it forward to November and December.

This seasonality in stock movements has weakened slightly over time, and they shouldn’t be taken on face value. 

For example, the performance of a specific industry or company can overpower seasonal movements, so it’s important that these seasonable stock movements aren’t the only basis for making an investment decision.

But it certainly helps to get a broad overview of how the market moves year to year.