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Please see our glossary for information on the financial terms used in this article.
Equity markets recorded mixed performance in September, against a backdrop of higher energy prices, above-target inflation, and rising government bond yields. This was despite continued investor enthusiasm for artificial intelligence (AI)-related stocks, resilient economic activity, and rising company profits.
In the US, the technology-focused Nasdaq Index rose, while the S&P 500 Index ended the month slightly lower. Brazil’s stockmarket gained, supported by some investor optimism ahead of the upcoming elections. European shares were notably weak, as was the UK. Shares in Hong Kong and China also fell.
The US Federal Reserve (Fed), European Central Bank and Bank of Japan all raised rates by a quarter-of-a-point (0.25%) in September. The increase by the Fed was the first rate hike since 2023. In contrast, the Bank of England left rates unchanged at 3.75%, but indicated that monetary policy may need to become more restrictive.
Rising inflation, higher interest rates and strong economic growth weighed on government bonds, causing bond yields in many markets to rise to their highest levels in several years. In Europe, French government bonds were particularly weak as concerns about the country's finances pushed borrowing costs higher relative to German government bonds.
In currency markets, the US dollar strengthened meaningfully against the euro and sterling, but weakened against the yen.
Energy was one of the dominant drivers of financial markets in September. Oil prices rose sharply in the first half of the month, following strikes on Saudi energy infrastructure (including the vital East-West export pipeline) and multiple attacks in the Strait of Hormuz. Although oil prices retreated later in the month, after Saudi Arabia indicated that the East-West pipeline would reopen, they still ended the month higher.
The prices of precious metals such as gold and silver ended the month lower, undermined by rising bond yields and a stronger dollar.
The views expressed on this webpage should not be taken as a recommendation, advice or forecast. We are unable to give financial advice. If you are unsure about the suitability of your investment, speak to your financial adviser.
The value of investments will fluctuate, which will cause prices to fall as well as rise and you may not get back the original amount you invested. Past performance is not a guide to future performance.
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M&G Investment Management Limited (MAGIM), M&G Alternative Investment Management Limited (MAGAIM), M&G Securities Limited (MGSL) and M&G Financial Services Limited (MGFS) are registered in England and Wales under numbers (936683, 2059989, 90776, 923891) respectively. The registered address of MAGIM, MAGAIM, MGSL, and MGFS is 10 Fenchurch Avenue, London, EC3M 5AG. MAGIM, MAGAIM, MGSL, and MGFS are authorised and regulated by the Financial Conduct Authority (“FCA”) under numbers 119328, 122011, 122057, 122058 respectively.