September 2015

• Global markets remained volatile in September 2015 as investors continued to grapple with concerns over China's slowdown, weak commodity prices and uncertainty surrounding U.S. monetary policy.
• The Federal Reserve left interest rates unchanged, citing global economic and financial developments as key risks to the outlook.
• European and Japanese equities posted mixed returns as accommodative central bank policies helped offset softer global growth expectations.
• Emerging markets remained under pressure, particularly commodity exporters facing weaker demand and depreciating currencies.
• Commodity prices stayed subdued, reflecting persistent oversupply and concerns over slower industrial activity in China.
• Government bond yields were relatively stable as investors balanced safe-haven demand against expectations for future policy tightening.

Asia (ex. Japan)

Asian markets outside Japan delivered mixed results in September as investors continued to assess the implications of China's economic slowdown and the August renminbi devaluation. Chinese equities remained volatile, though government support measures helped reduce some of the more extreme market fluctuations seen in the previous month.

Across the region, export-oriented economies such as South Korea and Taiwan faced pressure from weaker global trade and softer electronics demand. India remained relatively resilient, supported by stable inflation and improving domestic fundamentals, while several Southeast Asian markets were affected by currency weakness and reduced capital inflows.

Europe

European equities were broadly unchanged during September as investors balanced weak external demand with the ongoing benefits of the European Central Bank's quantitative easing programme. The weaker euro continued to support exporters, while low borrowing costs helped sustain confidence in domestic sectors.

Economic data suggested that the eurozone recovery was continuing, albeit at a modest pace. The ECB reiterated its willingness to expand or extend its asset purchase programme if necessary, helping to anchor bond yields and maintain supportive financial conditions across the region.

United States

U.S. equities declined modestly in September as uncertainty over Federal Reserve policy and concerns about global growth weighed on sentiment. At its September meeting, the Federal Reserve decided to leave interest rates unchanged, citing international economic and market developments as reasons for caution.

Domestic economic indicators remained generally positive, with continued employment growth and healthy consumer spending. However, manufacturing and export-oriented sectors faced headwinds from the stronger dollar and weaker global demand. Treasury yields moved lower as investors reduced expectations for imminent policy tightening.

United Kingdom

UK equities were mixed in September, with domestic resilience offset by weakness in commodity-related sectors and concerns over global growth. Employment and wage growth remained supportive, while low inflation continued to bolster consumer purchasing power.

The Bank of England kept interest rates unchanged and maintained a cautious tone amid subdued inflation and external risks. Sterling was relatively stable, and gilt yields declined modestly as investors sought the safety of high-quality sovereign debt.

Japan

Japanese equities posted modest gains during September as investors anticipated that the Bank of Japan would maintain or potentially expand its stimulus programme if inflation and growth failed to improve. Corporate profitability remained strong, aided by prior yen weakness and continued governance reforms.

Economic data were mixed, with export growth slowing in response to weaker demand from China and other Asian economies. Nonetheless, supportive monetary policy and ongoing pension fund allocations to equities continued to underpin the market.

Emerging Markets

Emerging markets remained under pressure in September as weaker commodity prices, slowing Chinese demand and uncertainty over U.S. policy continued to weigh on sentiment. Commodity exporters faced particularly difficult conditions, with currencies and equity markets remaining vulnerable.

Countries with stronger domestic fundamentals, including India, performed relatively better, though capital flows remained volatile. Latin America continued to struggle with recessionary pressures and political uncertainty, particularly in Brazil.

Commodities

Commodity prices were generally subdued in September. Oil prices remained volatile but traded within a broad range as persistent oversupply offset signs of stabilising demand. Markets also monitored production trends in the United States and the potential return of additional Iranian exports.

Industrial metals remained weak due to concerns over Chinese construction and manufacturing activity. Gold prices were relatively stable as delayed U.S. interest rate increases supported investor demand for defensive assets.