September 2020

• Global markets experienced increased volatility in September as investors reassessed elevated technology valuations and the sustainability of the economic recovery.
• Technology stocks, which had led gains throughout much of the year, experienced notable corrections during the month.
• Central banks maintained highly accommodative policies while governments considered additional fiscal support measures.
• Economic recovery continued gradually, though concerns increased regarding rising coronavirus cases in Europe and parts of the United States.
• Emerging markets delivered mixed performance amid fluctuating risk sentiment and dollar movements.
• Commodity prices weakened modestly due to uncertainty surrounding global demand conditions.

Asia (ex. Japan)

Asian markets outside Japan delivered mixed performance during September as investors balanced improving regional economic data against global technology sector volatility. Chinese economic activity continued recovering steadily, with industrial production and exports remaining supportive.

Technology-heavy markets such as Taiwan and South Korea experienced increased volatility following sharp gains earlier in the year, though semiconductor demand remained fundamentally strong. Broader regional sentiment remained supported by improving manufacturing activity and trade conditions.

Europe

European equities weakened during September as rising coronavirus cases across several countries increased fears of renewed restrictions and slower economic recovery. Financials, travel and hospitality sectors remained particularly vulnerable.

The European Central Bank maintained highly supportive monetary policies while governments discussed additional fiscal measures to offset potential economic disruption from renewed outbreaks.

United States

U.S. equities experienced increased volatility during September as investors reduced exposure to high-growth technology companies following months of exceptionally strong gains. Major technology stocks experienced sharp but relatively brief corrections.

The Federal Reserve maintained its highly accommodative stance and reiterated that interest rates would likely remain near zero for several years. Economic indicators continued improving gradually, though labour market recovery slowed somewhat.

United Kingdom

UK equities weakened during September as rising coronavirus infections increased the likelihood of renewed restrictions and Brexit negotiations remained unresolved.

Sterling experienced volatility due to political developments surrounding trade negotiations with the European Union, while economic recovery momentum slowed following strong gains earlier in the summer.

Japan

Japanese equities remained relatively stable during September as improving export conditions offset broader global market volatility. Yoshihide Suga formally became Prime Minister following Shinzo Abe’s resignation.

Investors generally anticipated policy continuity, including continued fiscal stimulus and accommodative monetary support from the Bank of Japan.

Emerging Markets

Emerging markets delivered mixed performance during September as technology-related weakness and shifting global risk sentiment created volatility across asset classes.

Asian emerging markets remained relatively resilient due to stronger economic recovery conditions, while some commodity-exporting economies experienced pressure from weaker energy demand expectations.

Commodities

Commodity prices weakened modestly during September as concerns regarding slower economic recovery and rising coronavirus cases affected demand expectations. Oil prices declined due to uncertainty surrounding future mobility and travel activity.

Industrial metals remained relatively strong due to continued Chinese demand, while gold prices retreated modestly following its sharp rally earlier in the year and a temporary strengthening in the U.S. dollar.