September was an action-packed month in the financial markets, with a significant amount of implied volatility, evident from the spike in the Vix index from just below 21 at the beginning of the month to more than 26 at its peak on September 20, ending the month at almost 23. The volatility – which can be viewed as a proxy for uncertainty and nervousness – was due to several events with global impact on the markets. If volatility stays high, it can have an impact on people’s portfolios as they will fluctuate more than they have done in recent times.
Due to the volatility and uncertainty the equity markets ended in red in September, with the S&P500 falling almost five pct. and the British FTSE100 falling a bit less than one pct.
One of the most salient events was the on-going energy crisis in the Europe region, which has pushed up prices on gas and electricity to levels where it can have severe impact on both private household costs and national economies. The crisis isn’t easing up, and thus is bound to be a theme which will be in focus for probably the remainder of the year and throughout winter.
The second blockbuster event, which made markets shiver, was the news that China’s largest real estate developer, Evergrande, was in financial distress and threatened by default. Markets across the globe took the news negatively and saw it is a potential sign that markets can’t continue into the skies and that China’s economic growth might halter.
Late in the month, the central banks came into focus as it is increasingly getting questions whether inflation is transitory – as the Fed believes – or whether it’s here to stay. If the latter is true, it will force central banks to consider decreasing its fiscal stimulus and begin to slowly increase rates. Both the American Federal Reserve as well as the Bank of England opened up for such an approach, while the European Central Bank remained soft in their approach. This discrepancy can have an effect in the markets and it’ll be interesting to follow in the near future whether the ECB will close in on its counterparts or remain supportive at the risk of inflation picking up. Over time this can have a big influence on people’s personal budgets as rate hikes can make mortgages more expensive, whereas hiking too fast can risk creating a new so-called taper tantrum, which can have a negative impact on the financial markets.
Towards the end of the month in particular tech companies were hit hard as markets saw a sell-off of growth stocks due to rising bond yields - the American 10-yields rose above one pct. for the first time since March last year. This happens because increasing yields mean expected increased costs to borrow money, which is something that can impact companies negatively, especially in times where capital is needed to expand.
With this macro-scene in mind, let’s have a look at the most popular stocks last month in the UK. We classify the most popular stocks as those that have had the most people from the UK trade them in September.
1. Apple Inc.
Equity performance: -6.80 %
The world’s most valuable company is generally one of the most traded stocks and in September that was no different, despite it falling more than 5 pct. for the month. It is still, however, up more than 25 pct. on the year.
The trading activity could have been extra-large this month as September was, per tradition, the month of presenting new devices, including the next iPhone in line, iPhone 13.
2. GameStop Corp.
Equity performance: -19.60 %
The controversial gaming company, GameStop, was the second most popular stock among UK customers to trade in September even though the equity’s value fell by almost 20 pct. through the month. While some of the fall should be seen in the light of generally sour markets, also has to do with disappointing Q2 results, which were reported earlier this month.
Since the drastic sell-off of the stock earlier this year and even before, the stock has traditionally fallen after financial reports.
Equity performance: 14.60 %
British Petroleum climbed more than 14 pct. in a month where British fuel supply became a hot potato. As the country experiences a significant fuel shortage in the latter part of the month, due to a lack of lorry drivers, fuel prices surge to eight year highs adding to an already positive month for the company.
4. Alibaba Group Holding Ltd
Equity performance: -13.99 %
Being one of the largest companies in the world, it’s no surprise that Alibaba is one of the most traded as well. The monthly performance ended in negative territory, just like the market, even though the company announced technological advances in the latter part of September as they are beginning to offer payment through Tencent Holding’s WeChat on a variety of different apps.
5. AMC Entertainment Hold Inc.
Equity performance: -17.01 %
The AMC Holding company was one of the most traded stocks in the UK in a very volatile month. The more than 100 year old business, which generally operates theatres and cinemas primarily in the US, but also internationally, saw early to mid-month increase of more than 13 pct., but ended up losing closing the month more than 15 pct. lower than it opened it. Still, the company has made a remarkable comeback since its late-2020 crisis as it hit 1.91 USD contrary to a trading-value just around 40 USD today.
As one of the most popular Reddit meme stocks, AMC made its impressive comeback as the world opened up while COVID restrictions lifted. Lately, the company has gained media attention over summer as the cinema-chain considered issuing new shares and then in early July decided not to. More recently, the company’s CEO Adam Aron has turned to Twitter to launch a survey poll about whether AMC should work towards accepting the cryptocurrency Dogecoin as payment. The poll got more than 140,000 votes and at the time of writing more than three quarters of people thought this was a good idea.
6. Tesla Inc.
Equity performance: 4.94 %
If you were asked – way too soon – to describe stock markets in the 2020’s with one word, a lot of people would probably answer “Tesla”. Unsurprisingly, the electrical vehicle manufacturer makes it to the list of the most traded stocks and if anything about that should be surprising, it is that it is in the bottom five of the list.
Tesla had a good September with its stock increasing with almost five pct. despite a late-month sell-off in the market. The company broke ground on a new battery factory in California in September and it also made progress on its so-called safety score, designed to determine a drivers behavior. This is yet another progression towards autonomous driving, which Tesla seems determined to pioneer with its controversial Full Self-Driving beta software, which it will begin to test in the near future.
7. EasyJet Plc
Equity performance: -1.10 %
EasyJet saw a decline of slightly more than one pct. The British budget airline’s stock took-off late in the month as a response to generally lifted flying restrictions, mostly evident by the US communicating that the travel ban for UK and Europe would be lifted by November after more than a year and a half blockade, but it felt back again towards the end of the month.
Before the rise in EasyJet’s value comes even though it hit turbulent weather earlier in the month, as media started doubting its ability to get out from underneath the COVID pandemic. One of the main focus areas was that the budget-rival Wizz Air had made a bid for EasyJet. Also British Airways owner IAG was rumoured to have made a bid for EasyJet. That has, however, been denied from EasyJet.
Going forward, there’s speculation that slot times in Gatwick may become vacant as a results of British Airways looking to move their short-haul operations to Crawley airport, if they are unsuccessful at getting a new agreement. This would be a signal of strength for EasyJet, which could see it spike even further.
The company also issued rights estimated at a value of more than one billion pounds during September. These rights are issued to help the company get back on track after the pandemic and is a financial instrument, which gives the company’s current stakeholders the possibility to buy new stocks at a predetermined lower price than their current value. The rights issue has been taking positively by the company’s current shareholders as almost all have accepted to purchase the rights.
Equity performance: 22.01%
British aircraft manufacturer Rolls-Royce is the high flyer in September’s top-10 traded list in terms of performance, climbing more than 20 pct. for the month. The drastic increase comes primarily as a response to the company off-loading its Spanish arm, ITP Aero division, earning roughly 1.5 billion GBP in the process.
The sell-off is part of an ongoing divestment strategy for Rolls-Royce, which, judging by the market reaction, is seen as a good thing.
9. Amazon.com Inc.
Equity performance: -6.30 %
Amazon fell about three pct. for the month more or less in line with the market and on the back of the late-month sell-off in growth stocks due to yield increases.
Equity performance: 6.61 %
Microsoft fell more than six percent and pretty much follows the rest of the market in a month with negative returns and the sell-off due to yield increases.
*Numbers for this article have been found on SaxoTrader.com and data is calculated based on data points each reflecting the first/last price in the monthly change from August to September and September to October respectively. The index results (VIX, FTSE and S&P have been found by looking at future contracts and CFDs).