September 2021

• Global markets experienced increased volatility in September as investors focused on inflation pressures, central bank tapering plans and slowing Chinese growth.
• Concerns surrounding China’s property sector, particularly the financial difficulties at Evergrande, weighed on global investor sentiment.
• Bond yields rose modestly as major central banks signalled gradual reductions in stimulus measures.
• Energy prices surged sharply, increasing inflation concerns across developed economies.
• Technology stocks faced increased pressure amid rising bond yields and policy uncertainty.
• Emerging markets weakened due to Chinese growth concerns and tightening global financial conditions.

Asia (ex. Japan)

Asian markets outside Japan weakened during September as concerns surrounding China’s property sector intensified following financial stress at major developer Evergrande. Investors worried that broader credit risks and slowing growth could affect regional demand and financial stability.

Regulatory pressure on Chinese technology companies also continued weighing on sentiment, while Taiwan and South Korea remained relatively supported by strong semiconductor demand despite broader market volatility.

Europe

European equities delivered mixed performance during September as rising energy prices and inflation concerns increased investor caution. Industrial and consumer sectors faced pressure from higher input costs and supply chain disruptions.

The European Central Bank maintained accommodative policies but acknowledged improving economic recovery conditions and increasing inflation pressures across the region.

United States

U.S. equities experienced increased volatility during September as investors assessed the Federal Reserve’s plans to begin reducing asset purchases later in the year. Rising Treasury yields created pressure for technology and growth-oriented sectors.

Economic activity remained broadly supportive overall, though supply chain disruptions, labour shortages and inflation concerns became increasingly significant market themes.

United Kingdom

UK equities delivered mixed results during September as rising natural gas prices and supply shortages created economic uncertainty. Energy-related companies benefited from sharply higher commodity prices.

Concerns regarding inflation and labour market disruptions increased following the end of several pandemic-related support programmes, while the Bank of England signalled that interest rate increases could eventually become necessary.

Japan

Japanese equities outperformed during September as political developments boosted investor optimism following the announcement that Prime Minister Yoshihide Suga would step down.

Investors anticipated additional fiscal stimulus and policy support from the incoming government, while exporters remained supported by improving global demand conditions.

Emerging Markets

Emerging markets weakened during September as Chinese growth concerns, rising U.S. bond yields and stronger dollar conditions reduced investor appetite for higher-risk assets.

Commodity-exporting economies remained relatively supported by elevated energy prices, though broader sentiment deteriorated due to tightening global financial conditions and uncertainty surrounding China’s property market.

Commodities

Commodity prices remained highly elevated during September, led by sharp gains in natural gas and energy markets due to supply shortages and recovering global demand.

Oil prices rose strongly as inventories tightened and mobility demand improved, while industrial metals weakened somewhat amid concerns regarding slowing Chinese construction activity. Gold prices remained under pressure from rising bond yields and dollar strength.