Globally, equity markets were broadly positive in September. In the US, the S&P 500 rose +2.0%, the Nasdaq increased +2.7%, whilst in the UK, the FTSE declined -1.7%. In Australia, the All Ordinaries Accumulation Index outperformed, rising +3.5%. The top performing sectors on the ASX were resources and technology, whilst healthcare was the worst performer. Resources was boosted by news of stimulus from the Chinese government, following a period of weak economic growth, whilst technology benefited from lower bond rates as the US Federal Reserve commenced its easing cycle. Notably, small caps outperformed large caps on the ASX (ASX small ords increased +5.1%) as investor risk appetite improved.

As discussed, a key event for equity markets in September was the US Federal Reserve cutting interest rates by 0.5% due to inflation reaching acceptable levels and a slowing economy. Whilst the event was expected by the markets, it is still an important milestone for equities, particularly small/mid cap stocks. Currently, Australia is not as close to rate cuts as the US, however we believe some easing in monetary policy is likely in the next 9-12 months. In bond markets, the US 10 year government bond yield fell -8 basis points to 3.78%, whilst in Australia the 10 year bond rate was flat at 3.97%.