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A definitive guide to September ASX share trends

note pad with the words 'what's next' written on it representing uncertainty surrounding mcmillan share price
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Investors carve buying patterns into even the most turbulent of markets. In fact, it is arguably easier to pick up ASX share trends when markets are choppy. So far this month we have seen market highs, collapses in confidence, rapid snapbacks and a whole range of other events. Here are some of the trends that have stood out to me for the rest of September.

Iron ore is up, LNG is down

This has been the story for a few months now. However, it is becoming more entrenched each week. 

Iron ore has risen by 57.2% in USD since the market low point on 23 March. To illustrate further, the Pilbara mining ASX shares have billions of dollars in future spending under way to capitalise on sustained high demand. Meanwhile, China became a net importer of steel in June for the first time in 11 years. Lastly, the feared competition from Simandou is clearly not going to have an industry-destroying impact.

The best ASX share in iron ore, for me, is Fortescue Metals Group Limited (ASX: FMG). I believe this company will deliver both share price growth and consistent dividends

The oil price is under threat yet again. A combination of high stockpile builds, Saudi Arabia cutting oil prices, and low international demand is impacting all energy prices. This is a permanent shift I believe in an industry that is in long-term terminal decline. For me, the best option to take advantage of this market is Origin Energy Ltd (ASX: ORG). Origin does have a significant stake in Asia Pacific LNG, however it is also Australia’s largest gas retailer. 

Finance is changing (again)

The buy now, pay later (BNPL) ASX shares have been on a slide since 18 August. When the market fell over on Tuesday, the BNPL sector was one of the hardest hit. When it rose again yesterday the BNPL shares were either flat or falling. This can be traced back to the entry of Paypal Holdings Inc (NASDAQ: PYPL) into the market. However, Commonwealth Bank of Australia (ASX: CBA) is already there with Klarna, and it is clear now that there is little barrier to entry.

To paraphrase Paul Keating, every pet shop gala will soon have their own BNPL company. However, there are other beneficiaries in the finance sector. I am keeping an eye on Tyro Payments Ltd (ASX: TYR) as well as CML Group Ltd (ASX: CGR). I have favoured the latter for a long time

Growth investors favour innovative ASX shares

As the heat is coming out of the BNPL sector, others are starting to see share prices inflate. In particular I have noticed this in ASX shares for non-software innovation. For example, artificial intelligence company Brainchip Holdings Ltd (ASX: BRN) has seen its share price rise by 264% in the past month. BrainChip is developing a new form of artificial intelligence which has moved into proof of concept partnerships.

Another strong performing innovation ASX share is DroneShield Ltd (ASX: DRO). This is an innovative company developing non-ballistic drone sensing and disrupting technologies. Droneshield has announced a number of new contracts in the past couple of weeks and has seen its share price rise by 55% in the past month.

Foolish Takeaway

These are some of the stronger trends that are likely to carry ASX shares through to the end of September. As always, I believe they provide strong investing opportunities.

For instance, while prices are still reasonable it is a good time to stock up on iron ore shares as a long-term hold. If you are waiting for LNG companies to rise back to previous levels then either cut your losses or don’t look at them for two to three years. Moreover, I think it is time to take profits on BNPL and to redeploy growth investing funds into companies delivering offline innovation. Particularly those with a high level of momentum. 

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Daryl Mather owns shares of DroneShield Ltd and Fortescue Metals Group Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends PayPal Holdings. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Tyro Payments and recommends the following options: long January 2022 $75 calls on PayPal Holdings. The Motley Fool Australia has recommended PayPal Holdings. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Daryl Mather