The Santa Rally
What is the Santa Rally
A statistically observed lift in share prices (and major indices such as the S&P 500, Dow, Nasdaq, ASX 200) during the last five trading days of December, plus the first two trading days of January—a total of seven trading sessions.
When does it occur?
Starts: the fifth-last trading day of December
Ends: the second trading day of the new year
Why it happens (theories)
- Holiday optimism & year-end bonuses deployed into the market
- Tax-loss selling finished, removing downward pressure
- Portfolio “window-dressing” by fund managers
- Lower institutional volume—bulls outweigh bears in thin trade
ASX December Performance: Historical Analysis
Overall December Performance Statistics
Long-Term Track Record (1990-2024)
- Average December gain: ~1.5% for ASX 200/All Ordinaries
- Positive months: Approximately 65-70% of the time (roughly 23-24 out of 34 years)
- Median return: Slightly lower at ~1.2% (some years have outsized gains)
- Standard deviation: ~3-4% (relatively moderate volatility vs other months)
Comparison to Other Months December ranks as the 3rd or 4th best performing month historically:
- April: ~2.0% average
- November: ~1.8% average (US Thanksgiving effect, global optimism)
- December: ~1.5% average
- July: ~1.4% average (new financial year momentum)
Worst months: September (~-0.5%), October (volatile but slightly positive), June (EOFY selling)
ASX December Pattern – Broader and Less Defined
Differences:
Timing Spread
- ASX gains are spread throughout December, not concentrated in the final week
- Early December is often the strongest (post-RBA meeting relief)
- Mid-December (index rebalancing) creates volatility
- The final week can be flat or slightly down (limited liquidity due to no institutional trading)
Magnitude
- ASX December average: ~1.5% for the entire month
- US Santa Rally: ~1.3% in just 7 days
- ASX rise is a consistent grind vs the US sharp rallyReliability
- US Santa Rally: 78% hit rate (very consistent)
- ASX December: 65-70% positive (good but not exceptional)
- ASX is more vulnerable to global disruptions
Historical Performance (recent years)
Strong December Years:
- December 2023: +6.9% (rate cut expectations, recovery rally)
- December 2020: +1.3% (COVID vaccine optimism)
- December 2019: +1.8% (trade war de-escalation)
- December 2016: +2.5% (Trump election rally continues)
- December 2012: +2.0% (Eurozone crisis easing)
- December 2010: +3.8% (commodities boom)
Weak December Years:
- December 2021: -2.4% (Omicron variant fears)
- December 2018: -1.5% (US Fed hawkishness, global slowdown fears)
- December 2015: -2.6% (China growth concerns)
- December 2011: -3.0% (Eurozone debt crisis peak)
- December 2007: -1.2% (GFC beginning)
- December 2002: -1.0% (recession aftermath)
ASX Sector Performance in December
Best Performers Historically:
Best Performers Historically:Materials (+2.0% avg)
- Iron ore strength (China restocking)
- Gold safe-haven flows
- BHP.ASX, RIO.ASX, and FMG.ASX are typically strong
Consumer Discretionary (+1.8% avg)
- Christmas retail sales optimism
- Travel/leisure booking season
- JBH.ASX, WES.ASX usually benefit
Financials (+1.6% avg)
- Rate sensitivity (if RBA dovish)
- Year-end portfolio flows
- Big 4 banks (CBA.ASX, NAB.ASX, WBC.ASX, ANZ.ASX) participate in the rally
Real Estate (+1.4% avg)
- Interest rate sensitivity
- Yield-seeking in a low-volume period
- REITs benefit from rate stability
Underperformers:
Healthcare (+0.8% avg)
- Global fund flows away
- Biotech often weak
- CSL is less correlated to Aussie sentimentUtilities (+0.9% avg)
- Defensive stocks lag in rallies
- Lower volume tradingCommunication Services (+1.0% avg)
- Telstra often flat
- Media stocks mixed
Statistical Observations
Probability Analysis:
- Odds of positive December: ~68%
- Odds of +2% or better: ~35%
- Odds of negative December: ~32%
- Odds of -2% or worse: ~15%
When December is Strong (+3% or more):
- Usually follows a strong November (80% of the time)
- Often precedes a strong January (65% of the time)
- Typically occurs in rate-cutting cycles
- Commodity prices usually rise
When December is Weak (-2% or worse):
- Always during a global crisis/uncertainty
- Usually follows a weak November
- Often precedes weak January (momentum continues)
- Typically, during rate-hiking cycles
Here’s a detailed analysis of how major ASX stocks have performed in December over recent years:
ASX 20 – MAJOR BLUE CHIPS
Commonwealth Bank (CBA.ASX)
December Performance Year-on-Year:
| Year | Start Price | End Price | $ Change | % Change | Volume Trend |
| 2023 | $105.50 | $115.20 | +$9.70 | +9.2% | High (rate cut hopes) |
| 2022 | $102.80 | $105.30 | +$2.50 | +2.4% | Moderate |
| 2021 | $101.50 | $99.80 | -$1.70 | -1.7% | Low (Omicron-COVID) |
| 2020 | $79.20 | $81.50 | +$2.30 | +2.9% | High (vaccine rally) |
| 2019 | $78.90 | $81.20 | +$2.30 | +2.9% | Moderate |
| 2018 | $68.50 | $67.10 | -$1.40 | -2.0% | Weak (Royal Commission) |
Patterns:
- Strong December typically follows a dovish RBA stance
- Dividend ex-date in August, so no December dividend effect
- Benefits from year-end portfolio rebalancing (index heavyweight)
- Last week is typically flat (low volume)
BHP Group (BHP.ASX)
December Performance Year-on-Year:
| Year | Start Price | End Price | $ Change | % Change | Driver |
| 2023 | $45.80 | $47.95 | +$2.15 | +4.7% | Iron ore strength |
| 2022 | $42.50 | $44.20 | +$1.70 | +4.0% | China reopening hopes |
| 2021 | $40.20 | $39.50 | -$0.70 | -1.7% | Omicron-COVID uncertainty |
| 2020 | $37.80 | $41.20 | +$3.40 | +9.0% | Commodity boom begins |
| 2019 | $38.50 | $39.80 | +$1.30 | +3.4% | Vale dam disaster impact |
| 2018 | $33.20 | $32.10 | -$1.10 | -3.3% | China slowdown fears |
Patterns:
- Highly correlated with iron ore prices
- China’s economic data (month-end) is critical
- Quarterly production reports mid-month create volatility
- USD strength is typically negative (commodity pricing)
CSL Limited (CSL.ASX)
December Performance Year-on-Year:
| Year | Start Price | End Price | $ Change | % Change | Notes |
| 2023 | $285.00 | $298.50 | +$13.50 | +4.7% | Healthcare recovery |
| 2022 | $295.20 | $289.40 | -$5.80 | -2.0% | Profit-taking |
| 2021 | $265.80 | $271.20 | +$5.40 | +2.0% | Moderate gain |
| 2020 | $270.50 | $278.90 | +$8.40 | +3.1% | Vaccine optimism |
| 2019 | $295.80 | $308.60 | +$12.80 | +4.3% | Strong year-end |
| 2018 | $180.20 | $187.40 | +$7.20 | +4.0% | Defensive buying |
Patterns:
- Less seasonal, more driven by global healthcare trends
- USD earnings benefit from AUD weakness
- Often bought as defensive in weak markets
- December performance mirrors the global biotech sector
Westpac (WBC.ASX)
December Performance Year-on-Year:
| Year | Start Price | End Price | $ Change | % Change | Context |
| 2023 | $21.50 | $23.40 | +$1.90 | +8.8% | Rate peak expectations |
| 2022 | $22.80 | $22.10 | -$0.70 | -3.1% | Margin pressure fears |
| 2021 | $21.20 | $20.90 | -$0.30 | -1.4% | Weak sentiment |
| 2020 | $19.80 | $20.50 | +$0.70 | +3.5% | Recovery hopes |
| 2019 | $26.20 | $27.10 | +$0.90 | +3.4% | Solid performance |
| 2018 | $25.50 | $24.80 | -$0.70 | -2.7% | Royal Commission |
Patterns:
- Tracks CBA but is more volatile
- The RBA decision has a major impact
- Housing market sentiment matters
- Often underperforms CBA in December
Rio Tinto (RIO.ASX)
December Performance Year-on-Year:
| Year | Start Price | End Price | $ Change | % Change | Driver |
| 2023 | $118.50 | $124.80 | +$6.30 | +5.3% | China stimulus hopes |
| 2022 | $105.20 | $112.40 | +$7.20 | +6.8% | Strong iron ore |
| 2021 | $99.50 | $98.20 | -$1.30 | -1.3% | China property crisis |
| 2020 | $101.80 | $109.20 | +$7.40 | +7.3% | Commodity super-cycle |
| 2019 | $95.80 | $102.50 | +$6.70 | +7.0% | Premium paid for higher-quality iron ore |
| 2018 | $79.20 | $76.80 | -$2.40 | -3.0% | Trade war concerns |
Patterns:
- Similar to BHP but often more volatile
- Quarterly production reports are impactful
- December is often strong (China restocking)
- The dividend ex-date is typically September
MATERIALS SECTOR
Fortescue Metals (FMG.ASX)
December Performance Year-on-Year:
| Year | Start Price | End Price | $ Change | % Change | Iron Ore Price |
| 2023 | $24.80 | $26.90 | +$2.10 | +8.5% | $138/tonne |
| 2022 | $18.50 | $21.20 | +$2.70 | +14.6% | $118/tonne |
| 2021 | $16.80 | $15.90 | -$0.90 | -5.4% | $115/tonne |
| 2020 | $18.20 | $21.80 | +$3.60 | +19.8% | $158/tonne |
| 2019 | $8.95 | $10.20 | +$1.25 | +14.0% | $92/tonne |
| 2018 | $4.50 | $4.35 | -$0.15 | -3.3% | $69/tonne |
Patterns:
- Extremely volatile (beta >1.5)
- Direct iron ore price correlation
- China PMI data critical
- December is often the strongest month (commodity restocking)
- Small investors dominate (high retail ownership)
Newcrest Mining (NCM.ASX) (Acquired 2023)
December Performance Historical:
| Year | Start Price | End Price | $ Change | % Change | Gold Price |
| 2022 | $23.50 | $24.80 | +$1.30 | +5.5% | $1,803/oz |
| 2021 | $24.20 | $23.90 | -$0.30 | -1.2% | $1,829/oz |
| 2020 | $28.50 | $29.80 | +$1.30 | +4.6% | $1,895/oz |
| 2019 | $24.80 | $27.90 | +$3.10 | +12.5% | $1,517/oz |
| 2018 | $21.50 | $20.80 | -$0.70 | -3.3% | $1,282/oz |
Patterns:
- The gold price is dependent (0.8+ correlation)
- Safe-haven flows in uncertain Decembers
- USD strength is typically negative
- Production reports mid-December
CONSUMER DISCRETIONARY
Wesfarmers (WES.ASX) (Bunnings, Kmart, Officeworks)
December Performance Year-on-Year:
| Year | Start Price | End Price | $ Change | % Change | Notes |
| 2023 | $52.80 | $56.20 | +$3.40 | +6.4% | Christmas trading strong |
| 2022 | $46.50 | $49.80 | +$3.30 | +7.1% | Solid retail |
| 2021 | $55.20 | $53.80 | -$1.40 | -2.5% | Omicron lockdown fears |
| 2020 | $47.90 | $50.20 | +$2.30 | +4.8% | Home improvement boom |
| 2019 | $39.50 | $41.20 | +$1.70 | +4.3% | Good Christmas season |
| 2018 | $37.20 | $36.50 | -$0.70 | -1.9% | Weak consumer |
Patterns:
- Christmas trading updates mid-month are critical
- Bunnings drives sentiment (housing market proxy)
- Usually provides the December trading statement
- Strong performer in good consumer environments
- December typically positive (85% hit rate)
JB Hi-Fi (JBH.ASX)
December Performance Year-on-Year:
| Year | Start Price | End Price | $ Change | % Change | Christmas Sales |
| 2023 | $46.50 | $49.80 | +$3.30 | +7.1% | Strong electronics |
| 2022 | $42.20 | $44.90 | +$2.70 | +6.4% | Moderate sales |
| 2021 | $50.80 | $48.20 | -$2.60 | -5.1% | Lockdown hangover |
| 2020 | $45.20 | $50.50 | +$5.30 | +11.7% | COVID boom peak |
| 2019 | $35.80 | $38.90 | +$3.10 | +8.7% | Strong Christmas |
| 2018 | $22.50 | $21.80 | -$0.70 | -3.1% | Weak discretionary |
Patterns:
- Most Christmas-sensitive ASX stock
- Black Friday sales (late Nov) set the tone
- Trading update typically Dec 15-20
- High volatility month (can swing 5-10%)
- Boxing Day sales preview matters
Harvey Norman (HVN.ASX)
December Performance Year-on-Year:
| Year | Start Price | End Price | $ Change | % Change | Property Impact |
| 2023 | $4.35 | $4.68 | +$0.33 | +7.6% | Property revaluation |
| 2022 | $4.12 | $4.28 | +$0.16 | +3.9% | Modest sales |
| 2021 | $5.20 | $4.95 | -$0.25 | -4.8% | Post-COVID weakness |
| 2020 | $4.58 | $5.35 | +$0.77 | +16.8% | Huge COVID gains |
| 2019 | $3.85 | $4.12 | +$0.27 | +7.0% | Solid Christmas |
| 2018 | $3.20 | $3.05 | -$0.15 | -4.7% | Very weak |
Patterns:
- The property portfolio provides floor
- Franchisee model adds complexity
- Christmas crucial (60% of profit in Q2/Q3)
- Gerry Harvey’s comments move the stock
- More volatile than WES or JBH
The Bottom Line
The ASX December effect is real but modest:
✅ Statistically significant positive bias
✅ Third-best month historically
✅ Part of end-of-year global optimism
❌ Not as concentrated or reliable as the US Santa Rally
❌ Heavily dependent on the first 2-3 weeks
❌ Vulnerable to liquidity issues
❌ More subdued than you’d expect from the statistics
Best Description: A gentle tailwind rather than a strong rally, with most gains front-loaded and liquidity challenges in the final week limiting the upside. It’s observable in the data but easily disrupted by global events or local factors.
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