The October Effect: Australian Markets and the Truth in 2025

Every year as spring hits Australia, financial media dusts off the same old headline: “Is the October Effect coming for investors?” The idea that October is cursed for markets has survived for over a century, fuelled by infamous crashes and a dose of superstition. But in 2025, does the October Effect hold any water for Australian investors, or is it just a persistent myth?

What Is the October Effect? The Myth vs. The Data

The October Effect refers to the belief that stock markets are more likely to experience significant declines during October. The legend gained traction after historic events like the Wall Street Crash of 1929 and the Black Monday collapse in 1987—both of which happened in October and sent shockwaves across the globe, including Australia.

• 1929: The Great Depression was triggered by October’s crash, shaping generations of investor anxiety.
• 1987: The ASX dropped over 40% in weeks after Black Monday, echoing global turmoil.

Yet, despite these famous events, financial researchers have repeatedly shown that October is not statistically more volatile or negative than other months. According to the ASX’s 2025 market data, the average monthly return for October over the past 30 years is slightly positive, at 0.6%—not the doomsday many expect.

2025: What’s Really Moving Australian Markets in October?

In today’s market, October is no longer the automatic red flag it once was. Several factors have shifted the narrative for Australian investors:

• Global Synchronisation: With markets more interconnected, shocks can arrive in any month, not just October.
• Policy Announcements: The Reserve Bank of Australia’s (RBA) rate decisions and the Federal Budget review often land in spring, making October a focal point for speculation and volatility.
• Tax Planning: Many companies and investors adjust portfolios around the September quarter-end, which can spill into October trading.

This year, for example, the 2025 Federal Budget Review was delivered on 15 October, and the RBA’s surprise rate hold sent the ASX 200 up 1.1% on the day—hardly a ‘cursed’ month for investors paying attention to fundamentals.

Should You Fear October? Lessons for Modern Investors

The real risk isn’t the month itself—it’s letting superstition or headlines drive investment decisions. Here’s what savvy Australians are doing instead:

• Staying Diversified: Spreading assets across shares, bonds, and alternatives cushions against shocks, regardless of the calendar.
• Focusing on Fundamentals: Earnings reports, economic indicators, and policy changes matter far more than the month.
• Embracing Volatility: Some volatility is normal. Active investors can find opportunities when others are spooked by seasonal myths.

With improved access to real-time data and analysis tools, 2025 investors have more power than ever to see through the noise. The October Effect is now more a lesson in financial psychology than a reliable market signal.

Key Takeaways for October 2025

• October’s reputation is mostly myth; recent ASX performance often contradicts old fears.
• Focus on policy events, earnings, and global trends—not the calendar.
• Use October’s headlines as a prompt to review your strategy, not to panic-sell.