Will it be a rocky road ahead for global equity markets?

Will it be a rocky road ahead for global equity markets?

  • Markets in September
  • Global market indices
  • Currencies
  • Fixed Income
  • Commodity sector news
  • Global Macro Updates
  • Key events in October

Markets in September

September has been the worst month for global stocks in a year and the weakest for global bonds since February. The S&P 500 has fallen about 7% since late July and is down over 5% in September. It remains up over 11% for 2023. The Nasdaq 100 is down nearly 6% in September, while the Dow has lost more than 3% so far. One of the catalysts dragging stocks lower this month is the Fed’s warning at its September meeting that it sees only two rate cuts next in 2024, rather than the four it had forecast in June. The Fed’s updated dot plot suggests the fed funds rate is still expected to peak between 5.50% and 5.75%. Other economic projections show a large upward revision to 2023 real GDP growth, from 1.0% estimated in June to 2.1%, while the core inflation forecast was revised down slightly, from 3.9% to 3.7%. As a result of this revision, bond markets were volatile in September as yields surged on investors digesting the higher for longer scenario with the benchmark 10-year Treasury yield rising to levels not seen since 2007. These higher yields have putdownward pressure on global stock markets, making them less attractive. The market also contended with a rally in crude oil and a strengthening US dollar. The combination of oil prices surging and rising rates is not good for stock markets. Global stocks also face the risk of further selling linked to large options positions being closed. 

The US consumer is still feeling the pinch and the resilient US economy may start to feel the consequences. The Conference Board’s consumer confidence index fell to 103 in September, down from 108.7 in August. Business activity in September was stagnant with the S&P Global Composite PMI down to 50.1 from 50.2. The S&P Global US Manufacturing PMI did increase to 48.9 in September of 2023 from 47.9 in August, however, the reading continued to point to small deteriorations in the manufacturing performance, as contractions in output and new orders softened.

Europe is now struggling with growth concerns. Business activity appears to be slowing with the Eurozone's flash composite purchasing managers’ index at 47.1 in September from 46.7 in August. However, inflation continues to fall, raising expectations that the ECB is done raising rates after it held rates steady at its meeting in September.

Global Market Indices


S&P 500 -5.19% MTD and +11.30% YTD
Nasdaq 100 -5.98MTD and +33.22% YTD
Dow Jones Industrial Average -3.18MTD and +1.42% YTD
NYSE Composite -3.79% MTD and +1.39% YTD


Stoxx 600 -2.46% MTD and +5.18% YTD
DAX -4.58% MTD and +9.29% YTD
CAC 40 -3.35% MTD and +9.24% YTD
FTSE 100 +2.07% MTD and +1.09% YTD
IBEX 35 -1.83MTD and +13.40% YTD
FTSE MIB -2.84% MTD and +18.16% YTD


MSCI World Index -4.59% MTD and +8.14% YTD
Hang Seng -4.19% MTD and -10.97% YTD

Mega cap stocks had a mixed September with Alphabet, Amazon, Apple, Nvidia, Microsoft, and Teslaall down on the month, while Meta Platforms remained relatively stable.

Amazonhad a mixed month: shares initially climbed after it said it would invest up to $4 bn in artificial intelligence firm Anthropic but were later brought down by the US Federal Trade Commission filing an antitrust lawsuit against it, claiming that the retailer keeps prices artificially high.

Energy stocks had a generally good September with Energy being the best performing sector in the S&P this month. Phillips 66, Marathon Petroleum, Baker Hughes Company, BP, Energy Fuels, ExxonMobil, Shell, Occidental Petroleum Corporation, Chevron, and Halliburton are all up. Only Apa Corp (US) is down for the month.

Materials and Mining stocks had a poor September on USD strengthening. Mining stocks Freeport-McMoRan, Newmont Mining, and Nucor Corporation are down, while Sibanye Stillwater is up as it looks to restructure its SA gold operations pursuant to ongoing losses over an extended period and operational constraints at the Kloof 4 shaft. Materials stocks were mixed in September with Albemarle Corporation, Mosaic, and Celanese Corporation all down,while CF Industries Holdings, and Yara International are up.


Oil prices were generally up in September due to tightening global supplies as Russia and Saudi Arabia extended oil cuts to the end of the year and US crude inventories at Cushing, Oklahoma — the delivery point for the US benchmark — dropped just below 22 million barrels, the lowest since July 2022 and close to operational minimums. Markets are becoming increasingly concerned over supply tightness continuing and the implications of this as the winter approaches. As noted by Bloomberg news, WTI has jumped by around a third since the end of June, and is on track for the biggest quarterly gain since June 2020, fueling inflation and causing headaches for central banks.

Gold prices fell in September to its lowest since mid-March as US yields surged and the USD continued to strengthen. Gold is likely to have fallen overall this month by more than 3% and is on track for its worst monthly showing since February.


The dollar was largely up in September, supported by rising yields. It was an extremely tough month for Stirling, which hit 6-month lows on Wednesday. The collapse in Stirling came in earnest after the Bank of England’s (BoE) surprise decision to hold rates during its September meeting. Markets are pricing in that BoE has now ended its monetary policy tightening cycle. Sterling is set for the biggest monthly drop since August 2022, down more than 4% in September. The GBP is -4.27% MTD and +0.29% YTD against the USD. The EUR -3.14% MTDand -1.88% YTD against the USD. With inflation falling in the Eurozone, the ECB is now expected to have reached its peak rate in its hiking cycle.


Bitcoin +0.85% MTD and +58.30 YTD
Ethereum -3.37% MTD and +32.97% YTD

Cryptocurrencies continued to be hit this month by the ongoing surge in yields and strengthening USD. 

Fixed Income

US Treasuries 10 year yield to 4.61%.
German 10 year yield to 2.84%. 
UK 10 year yield to 4.36%. 

US Treasury yields climbed to a 16-year peak in September, boosted by technical factors and fueled by expectations that the Federal will be keeping interest rates higher for longer. Yields continued to rise through most of September despite the Fed holding rates during its September meeting. This was largely due to the change in the Fed “dot projections” which indicated the possibility of one or two further rate rises this year with only two rate cuts pencilled in during the latter half of 2024. 

In Europe, markets are expecting the ECB to maintain its line of holding higher for longer given that inflation appears to be falling in its largest economy, Germany. Inflation there came in at 4.3% in September, down from August’s 6.4%. Bank of France Governor Francois Villeroy de Galhau has said the ECB shouldn’t test the economy “until it breaks.” However, the ECB is unlikely to consider rate cuts at any point soon. ECB President Christine Lagarde has said, “We are not talking about reducing rates,” she said. “Rate cuts have not been discussed by the Governing Council.”

The Bank of England surprised markets in September when it decided in a 5 to 4 vote to keep the interest rate unchanged. Despite the drop in inflation in the UK in August, it remains well above target at 6.8%.

Note: As of 5:00 pm EDT 27 September 2023


Global macro updates

Can the US government handle another showdown? The US is once again facing a showdown between House Republicans and Democrats in the Senate as bills to push through a temporary stopgap funding bill to prevent a government shutdown on 1 October have failed. Republican House of Representatives Speaker Kevin McCarthy on Wednesday rejected the stopgap bill advancing in the Senate. McCarthy is facing threats from hardline members of his own party who rejected a deal he negotiated with Biden in May for $1.59 trillion in discretionary spending in fiscal 2024 and approved in June, demanding instead another $120 billion in cuts. The Senate plan, which advanced on a wide bipartisan margin on Tuesday, would fund the government through 17 November and give lawmakers more time to agree on funding levels for the full fiscal year beginning 1 October. This rejection brings the US even closer to its fourth partial government shutdown in a decade. However, the Democratic-controlled Senate is expected to take a procedural vote on Thursday on that bipartisan short term spending measure rejected by Republican House Speaker McCarthy. Congress must pass legislation that the President can sign into law by midnight Saturday to avoid furloughs of hundreds of thousands of federal workers and halting a wide range of federal government services. The threat of another shutdown sent one year default swaps (CDS) to their widest since 1 June. The US government has been warned by ratings agency Moody’s that they may respond to any shutdown with adowngrade. Minneapolis Federal Reserve President Neel Kashkari has said a potential US government shutdown and the effects of the auto worker strike may slow the economy, requiring less aggressive moves from the central bank. “If thesedownside scenarios hit the US economy, we might then have to do less with our monetary policy to bring inflation back down to 2%,” Kashkari said in an interview on CNN.

Which way for Europe? ECB President Christine Lagarde reiterated once again that borrowing costs will remain elevated for as long as needed to bring down inflation. Labour markets remaining tight, with Eurozone unemployment at 6.4%. Spanish inflation accelerated for a second month, jumping to 3.2% in September from 2.4% in August on rising electricity and fuel costs. However, Germany saw a slowdown in inflation in September, with headline inflation at 4.3% in September, down from August’s 6.4%. Slowing PMIs, with the Eurozone composite PMI still in contractionary territory at 47.1 in September, although improving from 46.7 in August, along with falling consumer confidence, down to 93.3 in September from a revised 93.6 a month earlier, may split ECB policy makers further. More dovish members like Bank of Spain governor Pablo Hernandez de Cos think inflation should return to target if rates are kept at current levels for a prolonged period while others, such as Austrian central bank governor Robert Holzmann warning that rising oil prices could warrant additional rate hikes.

Is the UK recession bound? The UK economy seems to be heading further into trouble with the S&P Global Purchasing Managers' Index (PMI) for the services sector dropping to 47.2 from 49.5 in August, sinking further below the 50 dividing line between growth and contraction. The Composite PMI fell to 46.8 in September from 48.6 in August, the lowest reading since January 2021. And although inflation is falling, with headline inflation down to 6.7% in August from July’s 6.8% and core inflation rising by 6.2% in the 12 months to August down from 6.9% in July, there are concerns that the UK consumers are still to feel the full impact of higher interest rates. The GfK consumer confidence index rose to -21 in September 2023, up by four points from -25 in August and retail sales rebounded in August, up 0.4%, after a revised fall of 1.1% in July.

Key events in October

4 Oct 2023 OPEC+ Joint Ministerial Monitoring Committee. The JMMC will meet to discuss oil markets and potential oil quotas amid tightened markets. The JMMC does not decide policy, but may call an extraordinary meeting of OPEC ministers to do so.

13-15 October 2023 IMF/World Bank Annual Meetings. The meeting will take place in Marrakech, Morocco. The key themes include building economic resilience, reinvigorating global cooperation in terms of trade, and securing transformational reforms, particularly addressing the challenge of climate change, and supporting digitalisation.

22 October 2023 Argentina General Elections. The latest opinion poll from CELAG indicates that Javier Milei (LLA) is the candidate leading the polls with a slight advantage over the second place Sergio Massa (Frente). Mr. Milei managed to surprise many when his party won nearly 30% support in presidential primaries in August. 

26 October 2023 ECB meeting and monetary policy decision. ECB President Christine Lagarde has said “there is still much more ground to cover.” However, the focus will be on whether core inflation has come down enough. Slowing growth, especially in the largest Eurozone economy, Germany, may increase reluctance among policymakers to consider any further tightening.

28-29 October 2023 G7 Trade Ministers’ Meeting. The meeting will take place in Osaka-Sakai (Japan). With global trade falling in 2023 and trade restrictions rising, the G7 will likely discuss the problems of rising geoeconomic fragmentation.

31 October 2023 Bank of Japan meeting. With inflation running well above target for several months and the Yen falling to multi-year lows after the September meeting left no change in rates, markets will be anxious to see whether the BoJ will finally begin considering tightening its lax monetary policy despite concerns over domestic and global growth.

31 October - 1 November 2023 US Federal Reserve Monetary Policy meeting. The Fed will remain data dependent and likely to focus on this Friday’s personal consumption expenditures price index as well as on wage growth data and credit growth. It appears that the Fed expects that the current policy could further weaken labour markets, thereby suppressing wage inflation. Fed Chair Powell said during September’s monetary policy press conference that an easing of wage pressure could come about if there is an unexpected increase in labour supply, thereby not necessitating tightening of monetary policy. Despite signs of economic slowdown, consumer demand has remained resilient although consumer confidence is falling. The housing market is also under pressure with rising mortgage rates.

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