History is on the side of ASX shares right now.
July ranks as the second-best month for ASX shares, rising approximately 72% of the time since 1980. Both July and August historically form the strongest two-month period of the entire calendar year.
The first week of FY27 has already reflected that pattern.
ASX shares are marginally up as gold stocks surged and new financial year institutional flows rotated into beaten-down FY26 laggards. Healthcare, discretionary, and materials all led the charge.
The question for investors is whether that momentum can continue, and which specific stocks are best positioned to carry it.
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Why July tends to deliver for ASX shares
The July seasonality effect has a few drivers.
Tax-loss selling in May and June pushes weaker stocks lower ahead of the financial year-end, as investors crystallise capital losses to offset gains made elsewhere.
Once the new financial year begins, that selling pressure on ASX shares evaporates and often reverses, as institutional investors rebalance their portfolios and rotate into undervalued names.
AMP chief economist Dr Shane Oliver has confirmed that the typical pattern is for ASX shares to strengthen from October through to July, followed by weakness through September.
That seasonal pattern has been borne out in the first week of FY27. Healthcare and materials are already rebounding sharply from their FY26 lows.
BHP: the materials recovery story
BHP Group Ltd (ASX: BHP) was one of the ASX's great FY26 performers, skyrocketing 62% to close FY26 at $59.40 and hitting a record high of $65.98 in June.
Morgan Stanley renewed its buy rating on BHP this week with a 12-month price target of $67.50, implying more than 10% upside from current levels into FY27.
The copper supercycle thesis that drove BHP's FY26 outperformance has not changed heading into FY27.
AI data centre construction, electric vehicle adoption, and grid infrastructure investment continue to drive copper demand at a pace that supply cannot easily match.
CSL: the FY26 dog becoming FY27's darling
CSL Ltd (ASX: CSL) was one of FY26's most painful stories, falling 52% to finish the year at $114.74.
However, the first weeks of July have been more positive.
CSL has rallied more than 30% off its 3 June low. The stock has recovered the entirety of its May selloff in this reversal.
The buying looks increasingly like institutional reallocation at the start of FY27, with investors rotating into so-called FY26 "dog" names in the expectation they become FY27's darlings.
CSL's FY26 full-year result, due 19 August 2026, will be the real test of whether the recovery has genuine earnings support or is purely sentiment-driven.
Morgans retains a buy rating with a price target of $147.59, implying significant further upside even after the recent bounce.
Goodman Group: the AI infrastructure compounder
Goodman Group (ASX: GMG) offers a different angle on the July thesis.
While BHP captures the materials recovery and CSL captures the healthcare rotation, Goodman captures the structural, multi-year AI infrastructure buildout.
Data centres now make up 73% of Goodman's development pipeline. This development pipeline is on track to reach $18 billion by June 2026, with a 6.4 gigawatt global power bank that competitors cannot easily replicate.
Both Morgans and UBS carry price targets around $36, implying meaningful upside from current levels.
The risk: seasonality is a guide, not a guarantee
AMP's Dr Shane Oliver has cautioned that seasonal patterns can be overwhelmed by contrary fundamental forces when they are strong enough.
The RBA's signalling of further rate hikes remains a potential headwind for rate-sensitive names including Goodman.
CSL's recovery depends on the August result delivering earnings support, not just sentiment reversal.
And BHP's copper thesis could be tested if Chinese industrial demand data disappoints through the month.
Foolish takeaway for ASX shares
July is historically the ASX's second-best month, rising 72% of the time since 1980.
The first week of FY27 has already reflected that seasonal pattern, with healthcare, materials, and discretionary all surging.
BHP, CSL, and Goodman each offer a different and complementary way to participate in what the seasonal data, the early FY27 evidence, suggests could be a strong month for Australian shares.
