By Jan Faure
Global equity markets posted solid gains in September, buoyed by a long-awaited rate cut from the US Federal Reserve (Fed), resilient economic data, and continued enthusiasm around artificial intelligence. Technology stocks led the charge, with investor sentiment lifted by signs of economic stability and central bank support.
United States
US equities ended the month on a strong note, with the Dow Jones closing at a record high. The S&P 500 rose +3.5%, the Dow gained +1.9%, and the Nasdaq surged +5.6%, marking its best monthly performance since March. For the third quarter, the S&P 500 advanced +7.8%, the Dow +5.2%, and the Nasdaq Composite +11.2%, reflecting robust momentum in tech and growth sectors.
The Federal Reserve delivered its first rate cut of the year, lowering the benchmark rate by 25bps to 4.00%–4.25%. Fed chairman Jerome Powell described the move as a “risk management” cut, citing growing concerns over a softening labour market. August payrolls rose by just 22,000, well below expectations, while the unemployment rate ticked up to 4.3%. Despite labour market weakness, other economic indicators remained firm. Q2 GDP was revised higher to 3.8% annualised, the fastest pace since Q3 2023, and core PCE inflation, the Fed’s preferred measure of inflation, held steady at 2.9% YoY, reinforcing the Fed’s delicate balancing act between inflation and employment risks.
Europe & UK
European equities edged higher, supported by resilient earnings and a more stable inflation outlook. The Euro STOXX 50 gained +4.3% in Q3, recovering from a softer Q2. The European Central Bank (ECB) held rates steady at 2%, with President Christine Lagarde noting that inflation risks appear “contained in both directions.” While the ECB remains cautious, the recent EU-US trade agreement has helped ease tariff tensions, providing a tailwind for investor sentiment.
The FTSE 100 rose +1.8% in September and closed Q3 with a +6.7% gain, its strongest quarterly performance since 2022. Year-to-date, the index is up +14.4%, driven by a rotation into commodities and defensive sectors.
Asia
Asian markets delivered strong gains, led by China and Hong Kong. The CSI 300 rose +3.2% in September and +17.9% for Q3, fuelled by policy support for domestic chipmakers and accelerating AI investment. The Hang Seng Index jumped +7.1% for the month and +11.6% for Q3, marking its third consecutive quarterly advance. Year-to-date, the index is up +33.9%, reflecting robust global and regional inflows.
Japan’s Nikkei 225 gained +5.2% in September and +11% for Q3, supported by optimism over a new US-Japan trade deal, resilient macro data, and ongoing corporate governance reforms.
Gold
Gold surged +11.9% in September, reaching new all-time highs. Year-to-date, the yellow metal is up +47%, its best performance since 1979. The rally has been driven by US dollar weakness, central bank buying, and more recently investor concerns over a potential US government shutdown.
Looking Ahead
While September’s rally reflects growing confidence in central bank support and AI-driven growth, risks remain. Elevated valuations, slowing consumer sentiment, and political uncertainty, particularly in the US, could weigh on Q4 momentum.
October began with caution as the US government entered its first shutdown since 2019. Non-essential services have been suspended, federal staff furloughed, and key data releases delayed. With no resolution yet in sight, markets are bracing for potential volatility. Past shutdowns have cost billions in lost output, and investors will be watching closely for signs of progress.
Global Indicators – Local reporting currencies
